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FTSE in-depth: Vodafone tipped for Talk talk bid

By GEOFF FOSTER FOR MAILONLINE
Updated: 03:20 EDT, 10 November 2010

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The mutter from the gutter suggested that the heavyweight corporate finance team at HSBC have been burning the midnight oil of late working on a potential £1.8bn, or 195p a share, cash offer for TalkTalk Telecom.

Geoff Foster: 'Buy, buy, buy' was the shout.

Shares of the broadband internet provider, home phone and mobile business, which was demerged from Carphone Warehouse (5.5p easier at 352.5p) in March, buzzed 6.3p higher to 140p as speculation intensified.

Vodafone, the mobile phone giant, was last night being tipped as a possible buyer of TalkTalk, the UK's second biggest broadband firm behind BT with more than 4m customers.

Chief executive Vittorio Colao yesterday pleased the market with impressive interim figures and said he wanted to create a more valuable Vodafone.

Colao sold the group's shares in China Mobile for £4.3bn in September and now has plans to sell its stake in Japan's Softbank for £3.1bn. He therefore could easily afford to swallow TalkTalk, and an offer in the region of 195p would give founder and chairman Charles Dunstone a huge windfall.

His 32.4% stake would be worth £569m, while his old mate David Ross's 16% shareholding would reap £267m.

Struggling music, video and books retailer HMV, known in the City as friend of the bears, eased a penny to 46p despite news of a new shareholder appearing on its register. Russian billionaire and entrepreneur Alexander Mamut has acquired a 3% stake.

The announcement coincided with news that Mamut's investment company ANN had also bought 10% of Russia's largest mobile handset retailer Euroset, which has more than 5,000 outlets.

Mamut sprang to prominence in January 2008 when he bought US blogging website LiveJournal. 'Buy, buy, buy,' was the early shout as the Footsie breached 5,900 following solid trading statements from heavyweights Vodafone and Barclays, 11.35p better at 297p. But after touching 5,902 it succumbed to sporadic bouts of profit-taking, yet still closed 25.23 points up at a 29 month high of 5,875.19.

Wall Street relinquished 20 points on profit-taking in early trading, although shares of natural gas explorer Atlas Energy spurted on news of a $4.3bn bid from Chevron.

News that funds under management increased £17.5bn, or 11% across the third quarter, to £181.5bn, due to a solid £5.4bn in net inflows, helped fund manager Schroders climb 87p to 1667p. A record gold price of $1,422 an ounce and an impressive 20% rise in third-quarter profits to £17.5m helped Randgold Resources sparkle at 6265p, up 275p.

Collins Stewart expects an even stronger final quarter and has a target price of £70. Meanwhile, despite being appointed joint broker to Footsie company Randgold, Collins Stewart eased 0.25p to 81.5p.

The confident tenor of chief executive Harry Michael's AGM address left Centamin Egypt 12.1p higher at 197.2p. He reiterated that the group would achieve full-year production guidance of 160-170,000 ounces of gold in 2010 and would produce 300,000 ounces in 2011.

Confirmation that the large Sapele-1 exploration prospect offshore Cameroon has successfully found oil and gas in two of its target zones had punters piling into BowLeven. They chased the shares 69.25p higher to 269p after chief executive Kevin Hart said the finds are 'potentially transformational'.

He gave a wide range of possible oil in place estimates of 40-290m barrels and 55-380m barrels for each. Responding to a Charles Stanley Securities recommendation and target price of 74p, handset tester Anite added 1.75p at 54.75p. The broker is confident the company is set to benefit from the increasing pace of roll-outs of the next generation of 4G mobile networks.

Insurance company Gable Holdings edged up 0.25p to 15.5p following a trading update. The board is confident it will end the year 'in line with market expectations'. Arden Partners forecasts pre-tax profits of £2.5m for the full-year, up from £1.5m in 2009. It maintains a target price of 26p.

News that Betfair co-founder Andrew Black has increased his holding in Hydrodec to 3.1% failed to excite shares of the industrial oils refiner and recycler, which closed 0.13p off at 8p. Black apparently has been a long term fan and is attracted by the company's global potential and recycling technology.

Stratex International, the Turkish focused gold explorer, firmed 0.2p to 5.075p on a positive update from its Inlice and Altintepe projects, which are moving towards gold production by the first-quarter of 2012.

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