Market report: Wednesday close
SHARES of oil and gas explorer BG Group have more than doubled since the start of last year, and are continuing to maintain their pace.
Those who scoffed when the price topped 300p must be continuing to have nightmares about a missed opportunity. Shares in the former exploration arm of British Gas were again powering ahead today, driven by fresh talk of takeover.
At one stage, they touched 743½p before paring back their lead to 30½p at 734p. What makes its performance even more remarkable is the fact the shares today went ex a 5p dividend.
City speculators are convinced that despite the strong performance by the shares during the past couple of years, fuelled by soaring oil and gas prices, one of the world's big oil giants will soon bid for BG rather than run the risk of its being gobbled up by a rival.
Only five companies have the financial muscle to make such a move. They include Exxon Mobile and Chevron in the US, Royal Dutch Shell and BP this side of the Pond and Total of France. Exxon Mobile was being tipped to make an offer of 900p a share today, although a lot of City money is riding on Royal Dutch Shell.
Brokers say Shell, up 19p at 1863p, needs to do a deal. Its replacement reserves ratio has slumped as low as 70% - following the big writeoffs several years ago - and BG has reserves and potential reserves aplenty. A bid by for BG would resolve a lot of Shell's problems in one fell swoop. The only drawback is the cost of launching such a bid.
At 900p a share, BG would be valued at £31.6bn. But in these days of highly leveraged private equity bids, few would be prepared to be against such a move.
Share prices generally set about clawing back some of this week's losses despite the move by the Fed overnight to raise US interest rates by a quarter-point to 4.75% - the 15th consecutive rise since June 2004.
Traders in London were pinning their hopes on an opening rally by the Dow when trading resumes on Wall Street. As a result, share prices in London were marked higher with the FTSE 100 index rising 26.3 to 5962.0.
InterContinental Hotels stood out with a jump of 27½p to 928p after broker UBS raised its rating from neutral to buy with a target of 1130p. A buyout of the shares would have to be pitched at around 1400p.
Bid rumours continued to bubble away in the banking sector, where vague talk of an offer of 2600p a share from Citibank in the US lifted Royal Bank of Scotland 12p to 1852p. Alliance & Leicester added 11p to 1190p amid whispers that Spain's Banco Santander was poised to bid 1350p a share. Santander bought mortgage lender Abbey a couple of years back.
United Utilities put on 7p to 691½p after a trading update pointed to results in line with expectations. Cashbox got off to a flying start on Aim following a placing of 22.5m new shares at 20p. The shares started life at 22½p before settling at 24¾p. Cashbox operates an 845-strong chain of hole-in-the-wall money dispensers under lease hire and plans to use the £4.5m proceeds installing a further 583 in areas of low footfall that would not be serviced by banks or building societies.
It has been a busy few days for serial investor Bob Morton. Just days after announcing that software security specialist Systems Union, where he has a 10% stake, had received a takeover approach, he was reporting a return to the black for another of his quoted vehicles Vislink, which supplies microwave radio and satellite broadcasting vehicles as well as integrated CCTV systems.
Vislink made a pre-tax loss of £305,000 last year but turned in a profit of £6.36m this year. The shares, which have climbed from a low of 41½p since the start of the year, ran into profit-taking, dipping 1¼p to 57¾p.
Meanwhile, Systems Union lost 1p to 197¾p, with shareholders still awaiting the bidder's identity. Early attention focused on Michael Jackson's blue-chip software company Sage because Morton and Jackson are big buddies. But the latest speculation suggests the bidder may turn out to be overseas. Sage traded ½p easier at 271½p.
Dairy Crest responded to a positive trading update ahead of results in May with a rise of 6¾p to 481½p. The group says sales were driven sharply higher by demand for its Cathedral City cheese. Broker Panmure Gordon has repeated its buy rating.
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