Yesterday's trading: Galiform builds on bid rumours

By Geoff Foster for MailOnline
Updated: 03:13 EDT, 29 September 2009

Something could be cooking at Galiform. Hungry punters certainly thought so as they gorged themselves on shares of the kitchen cabinet manufacturer, sending them 3.45p higher to 75.3p.

Geoff Foster: A flurry of takeover bids and deals lifted Wall Street and helped resuscitate London

Speculation persists that Britain's biggest builders' merchant and Wickes DIY retailer Travis Perkins (35½p better at 801½p) is lining up a mouth-watering takeover bid.

Galiform trades as Howdens Joinery and has 450 depots in the UK and several in France. Broker Noble recently highlighted the group as a major recovery play in the retail sector, believing it is geared into a UK macro rebound.

It says Howdens addresses the 'done for you market', selling kitchens and joinery from local depots to small builders nationwide.

Valued at around £475m, Galiform looks a 'no brainer' acquisition for Travis Perkins. Rumours have been doing the rounds for weeks that ambitious Travis boss Geoff Cooper has Galiform at the top of his shopping list.

Travis's gearing stands at a conservative 36%, so there is plenty of scope for a spending spree.

Kitchen DIY sales at Wickes have grown at double-digit levels, helped by the bankruptcy of MFI. Swallowing Howden would help lift the business to a new level, leaving it in great shape to make benefit from the recovery.

A flurry of takeover bids and deals across the Pond lifted Wall Street 180 points in early trading. That helped resuscitate London. Down 32 points at the outset, the Footsie rallied strongly to finish 83.50 points higher at 5,165.70, while the FTSE 250 climbed 108.96 to 9,169.40. The volume of business was nothing to write home about as attendance in the City was restricted by the Yom Kippur Jewish holiday.

Wall Street was set alight by news of Abbott Laboratories' £4bn cash purchase of Belgian conglomerate Solvay's pharmaceutical division and Xerox's £4bn cash offer for outsourcing and information services company, Affiliated Computer Services.

Back home, revived takeover chatter helped Legal & General rise 3.95p to 79p.

Sold down to 98.7p on talk of an imminent £4bn-plus rights issue priced at between 80p and 85p, Lloyds Banking Group, which is 43% owned by the British taxpayer, recovered to close 0.3p dearer at 103.75p. Royal Bank of Scotland cheapened 0.4p to 51.7p after broker ING downgraded to sell from hold.

International bank Standard Chartered rose 25p to 1509p in response to a RBS/ABN Amro recommendation and increased target price of £20, up from £16. The broker says its exciting growth profile is driven by the well diversified Wholesale Bank.

Argos-to-Homebase retailing giant Home Retail shed 9.1p to 283.08p after Credit Suisse downgraded to underperform from neutral. The broker is worried about Argos and believes that structural risks and increased competition are likely to restrict its ability to grow medium-term sales and margins.

Talk of a pending upbeat circular helped household goods giant Reckitt Benckiser rise 81p to 3045p.

Churchill Mining, the Indonesian-focused coal group, surged 12¾p to 98p after revealing not just one, but three approaches by interested parties. One is a potential bid for the company but the other two are for acquisitions of specific projects.

After informing the market that bid talks are continuing, Caledon Resources added 3½p at 62¼p.

London & Stamford Property, run by entrepreneurs Raymond Mould and Patrick Vaughan, has bought 150 apartments developed in the old North Stand of Arsenal's former Highbury Stadium, just round the corner from the Emirates.

It is the group's first foray into the residential market after raising £226m via a share issue in the summer. It is paying £41.4m for the flats and hopes they will all be let by this time next year. The shares eased ¼p to 130p.

Eco City Vehicles, the Aim-listed distributor of London black cabs, eased ⅛p to 2¾p ahead of today's interim results. The company co-develops and helps manufacture the Mercedes Benz Vito taxi at its Coventry plant. Word is the Vito has been outselling its Manganese Bronze black cab rival by 4-to-1, taking 25% of the new taxi market.

Support services and engineering group Southern Bear edged forward ⅛p to 2¼p. Its subsidiary Fenhams has been awarded a lucrative contract with Eaga.

Elsewhere, a contract win with Lockheed Martin helped Kewill firm 2¼p to 102¼p