Yesterday's trading: Retailers escape bloodbath

By Geoff Foster for MailOnline
Updated: 03:57 EDT, 15 March 2007

Relaxed retailers escaped the bloodletting and it's easy to see why. Who in their right mind would be a big seller of the sector when there are many hungry and super rich private equity players hovering?

Rumours are rife that another major high street name will soon join Sainsbury and Alliance Boots on the takeover block. All fingers were pointed at Kingfisher as shares of the B&Q do-it-yourself group raced away to touch 267½p on heavy buying before closing 3¾p better at 254p on turnover of 68m.

Kingfisher has forever been mentioned in the same breath as US giant Home Depot but punters responded yesterday to gossip that an Apax-led consortium is lining up an offer. Analysts pooh-poohed the idea but then they laughed out loud on Friday when talk of an offer for Alliance Boots was doing the rounds.

Better-than-expected figures from Argos and Homebase owner Home Retail (1¾p up at 423¾p) obviously helped Kingfisher's cause. Underlying sales at Homebase since Christmas are up 9.9%.

Awaiting bid terms from the CVC-led consortium, Sainsbury rose 9p to 530p. An industry source suggests the supermarket's eventual take-out price will have the number six in front of it. Once CVC lays its cards on the table, another bidder will pounce.

Alliance Boots traded between extremes of 1029p and 989p before closing 6p cheaper at 1011½p. Stefano Pessina and US private equity firm KKR are expected to raise their 'sighting shot' £10 a share offer to 1050p-plus.

Currys electrical group DSG International also found favour at 169p, up 3p. Trendy fashion retailer Next soared to 2096p at the opening on the back of bullish Deutsche Bank comment and target price upgrade to 2450p from 2100p, before closing 9p easier at 2015. The broker says it is entering a convincing recovery phase.

The rest of the market was gripped by growing fears about the escalating crisis in the US sub-prime mortgage market. Following Wall Street's overnight slump of 242 points and ensuing heavy falls in Far East markets, the Footsie opened sharply lower and stayed there.

It closed 160.5 points down at the day's worst level of 6,000.7 after the Dow traded a further 136 points off. The FTSE 250 dropped 316.8 points to 10,944.1.

Financials bore the brunt of the sell-off. As super bears roared that the US mortgage market meltdown not only threatens global stockmarkets but may billow into a financial cataclysim to rival the 1980s' US savings and loan financial debacle, banks were battered.

HBOS, which traded without entitlement to the latest dividend, led the retreat and fell 62p to 1017p. Barclays shed 32½p to 673½p and Royal Bank of Scotland 93p to 1955p.

Major stockmarket investor 3i lost 61½p to 1075½p while Legal & General declined 7½p to 146¼p and rivals Old Mutual lost 7¾p to 159¼p and Friends Provident 8½p to 194p.

Nervous selling ahead of today's results left Prudential 26½p cheaper at 643p. Management led by Mark Tucker will present the results of its UK strategic review.

Broker Keefe, Bruyette & Woods believes it is unlikely to bring about a major shift in strategy and therefore should disappoint the market. If so, speculation persists that hedge fund activists are primed to rock the boat.

Morgan Stanley advised clients to gorge themselves on Restaurant Group, and they did. The shares closed a tasty 19p better at 350p after the broker moved to overweight and lifted its target price to 400p from 265p. It describes the company as a 'best in class operator'.

Placed on Aim at 10p, Trust Property Management Group, which provides professional property management and chartered surveying services, ignored the surrounding malaise and closed at 13¼p.

Property developer and construction minnow Amco Corporation collapsed 75p to 440p as directors ran for the exit. Interim chairman Michael Speakman sold his entire holding of 3,000 shares at 510p, while finance director Ian Swire unloaded 7,000 at the same price. He retains 15,000 shares.

News it has suspended drilling at the Zhana Makat field in Kazakhstan after encountering unexpected high pressure at its ZMA-A6 exploration well and is now planning to plug and abandon it left Max Petroleum 2¾p off at 112p.

Mission Marketing rose 2p to 130½p following the acquisition of property marketing agency Bastin Day Westley for an initial £5.98m. Aerospace and defence group Hampson Industries edged up 1p to 131p on a pleasing trading update. It expects fullyear trading profit to be ahead of expectations, despite a substantial adverse movement in the dollar/sterling exchange rate.

• Uunilever's investor seminar impressed Evolution. It highlighted the group's focus on emerging markets and personal care products to accelerate top-line growth. Acquisitions will be made in these areas. There will be new product activity in the current year with big ideas and big brands, rolled out globally. Margins should begin to improve. Shares closed 4p off at 1402p.