Yesterday's trading: Arab eyes on British Land

By Geoff Foster for MailOnline
Updated: 02:45 EDT, 10 October 2007

Only a check-out away from swallowing supermarket giant Sainsbury for £10.6bn, while also sitting on stranglehold stakes in the London Stock Exchange, Arab investors are strongly rumoured to have set their sights on British Land, one of the largest property development and investment companies in the UK.

Shares in the group, which converted to a more tax efficient Real Estate Investment Trust in January, soared to 1159p and closed 55p higher at 1147p on hefty turnover of 18m.

The shares have collapsed from a year's peak of 1722p and were in the dog-house again recently when the company decided to pull its sale of Sheffield's Meadowhall Shopping Centre because it was unable to get an acceptable price during the during the credit crunch.

Meadowhall is one of only six out-of-town 'super regional' shopping centres in the UK and was valued at £1.64bn in June.

The most resilient sector of the property market is London offices and British Land owns prime developments, including the flagship Broadgate and Regents Place. It is also building a new Leadenhall Building in the City which will be completed in 2011.

With the stock scraping the bottom of the barrel, an Arab investor, possibly Istithmar, the private equity company wholly owned by the Gulf State's oil-rich rulers, could easily afford to buy a sizeable stake in British Land prior to launching a full-scale offer north of £15 a share. Perennial takeover favourite Hammerson jumped 51p to 1196p and Land Securities 43p to 1693p in sympathy.

Another Pre-Budget report and yet again the abolition of stamp duty on share dealing failed to get a mention. Surely. Chancellor Alistair Darling would have had the City eating out of the palm of his hand if he had scrapped the iniquitous 0.5% levy on every share purchase.

Many investors have turned to dealing in controversial Contracts for Differences to avoid paying stamp duty and they could return to dealing in the ordinary way should he have a change of heart before the next Budget. The Footsie rallied 74.5 points to 6,615.4 with the help of an opening 40 point gain on Wall Street.

Hopes that the worst of the credit crisis is over and UK interest rates could soon be on the way down encouraged fund managers to dip their toes into the market. Struggling Northern Rock led the advance with a gain of 34¼p at 206¾p after the Treasury agreed to guarantee all new retail deposits in the mortgage lender 'during the current instability'.

Amid rumours that Singapore investment company Temasek was adding to its 11% stake in the international bank, Standard Chartered rose 56p to 1696p.

Forced down the plughole in recent months by a weak dollar and a drastic slowdown in the US housing market, plumbing giant Wolseley blew another gasket yesterday. The shares nose-dived to 835p as Citigroup placed 9m shares at 837p with institutional investors before closing 18½p lower at 855p.

Burren Energy gushed 258p to 1180p after rejecting an indicative 1,050p a share cash bid approach from ENI. That excited Premier Oil, 85p higher at 1120p and Dana Petroleum, 66p better at 1187p.

Punters chased Alfred McAlpine 25½p higher to 523½p on continuing speculation about a possible bid from Carillion, 2½p dearer at 418p.

A Cazenove recommendation and vague stakebuilding gossip helped department store Debenhams add 4½p at 105¾p. Bombedout-Woolworths firmed ½p to 18¾p on upbeat comments from Kaupthing. With so much excess space, and improving brand momentum, a tie-up with a grocer could be on the cards, particularly as grocers search for new format opportunities, says the broker.

Following the clearance of a overhang of stock and as management embarked on a City roadshow, Alexander Mining firmed ¾p to 20¾p.

Broker Seymour Pierce advised clients that the sharp fall in Care UK on contract concerns has been overdone and the shares rallied 22p to 568p. City of London Group advanced 6½p to 99p after its Financial Services unit was authorised by the Financial Services Authority to conduct regulatory business from October 16.

Autoclenz plummeted 24½p to 75½p after warning that full-year profits will come up £300,000 short because its trading relationship with a car auction house is to be revised after changes to the latter's outsourcing policy.

• News of a significant contract win from a major competitor failed to inspire Playtech, 3p off at 351p. Collins Stewart says the deal with bet365 to migrate its poker players onto its iPoker network is bullish. The impact of the deal on profits will be relatively small this year but it has upgraded its sales forecast by £1.6m to about £70m for next year. The company is increasing its reputation for surprising on the upside.