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Systems Union sprinting ahead

By Geoff Foster for MailOnline
Updated: 02:03 EDT, 28 March 2006

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JERSEY-based entrepreneur and greyhound racing fanatic Bob Morton holds all of the aces at Systems Union Group, which soared 30¾p to 207½p on confirmation of a bid approach.

He is not only chairman of the software vendor but is the biggest shareholder with 10.5%. Rumours that accountancy software group Sage is ready to table a 225p-a-share, or £247m cash bid, did the rounds but Morton will not sell the company on the cheap.

Formed via the merger of SunSystems and Pegasus Group into failed dotcom company Freecom.net, Systems Union has been turned around by hard-nosed chief executive Paul Coleman. It returned to profits growth last year as it reaped the benefits of significant investment. It was also helped by the shift to new accounting standards.

Earlier this year Coleman said that trading had improved in line with expectations and was ahead of last year. Global revenues advanced 8.5% to £113m. Sage's name was put in the frame because in 2000 it lost out in a bidding war to Systems Union for Pegasus, the e-commerce software company. It has kept it on its radar screen and even though Sage recently announced the £334m cash purchase of Visma, a Norwegian accounting software group, dealers say it still has the financial clout to bid for SUG.

Morton is also chairman and shareholder of support services group Maclellan (1p off at 112p) which was on the receiving end of a bid approach last week. Recruitment company Hat Pin, where Morton holds 9.3% of the firm, improved 2p to 82½p on strong results. Pretax profits soared 51% to £786,000 and the dividend was lifted 1% to 1.1p. Broker Arden Partners says buy. New

Federal Reserve chairman Ben Bernanke chairs his first Federal Open Market Committee meeting today and he is expected to rubber stamp the Fed's 15th consecutive ¼% rate hike to 4.75%, taking US rates above UK rates for the first time since 2001. With that in mind and the end of the first-quarter approaching, many fund managers decided to trouser some profits. The Footsie lost an initial 10.7 point gain to close 64.1 points off at 5,972.2. Wall Street dipped 41 points in the early stages.

Mortgage bank Alliance & Leicester rallied strongly from 1135p to touch 1221p on gossip the board has rejected a £13-a-share bid approach from France's Credit Agricole. The close was 10p better at 1168p.

Speculation that BAE Systems and VT Group are putting the finishing touches to a £750m or 357p a share joint bid for Babcock International left the latter 11¾p higher at 327¼p. Positive comments by Merrill Lynch ahead of today's results helped Dana Petroleum gush 35½p to 1009½p.

Kenmare Resources rose 5½p to 49¾p after announcing a 40% increase in its ilmenite resource from its Moma Mine in Mozambique. Beowulf Mining edged up ½p to 5¾p after being granted the licence to a large ore deposit of iron and titanium in Northern Sweden. Analysts say the licence is expected to propel Beowulf from a pure exploration company into a producer.

Afren rose 9¼p to 68p after confirming that Chevron, the operator of Block 1 of the Nigeria Sao Tome and Principe joint development zone, commenced drilling of the first exploration well on January 14.

The appointrment of former BP senior executive Mike Buzzacott as chairman pleased the City and Biofuels Corporation added 10p at 177½p.

Gresham House, the property and investment trust, jumped 75p to 437½p after revealing plans to demerge its commercial property portfolio into a Real Estate Investment Trust company.

Unimpressed with news of Viking raider Baugur's increased shareholding of 10%, pic 'n' mix retailer Woolworths shed 1¼p to 36¼p. Dealers fear tomorrow's results will be a dog's breakfast. Analysts expect pretax profits to fall to £40m, from £52.5m.

Placed on Aim at 22p by broker Evolution Securities, luxury travel business Western & Oriental touched 27p and closed at 26p.

• TEATHER & Greenwood believes fashion group Next (22p down at 1660p) is the cheapest of the Footsie retailers. It is pretty much the only retailer being valued on fundamentals, not distorted by a recovery or bid premium.

Others are currently priced to disappoint on earnings or hopes of a successful bid. In the past, Next has shown an uncanny knack of surprising on the upside.

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