DAILY TELEGRAPH (UK): Market report: “Away from the races, the bets are riding on bid targets: “Traders were busy speculating which company would be the next bid target yesterday, with some placing their bets on BG…”: “The chatter pushed BG up 8¼ to an all-time high of 422¼p on renewed speculation that Shell, 1½ higher at 493p, may be considering an offer.” (ShellNews.net) 16 March 05

By Yvette Essen (Filed: 16/03/2005)

Away from the races, the bets are riding on bid targets

Traders were busy speculating which company would be the next bid target yesterday, with some placing their bets on BG and others on Domestic & General.

The chatter pushed BG up 8¼ to an all-time high of 422¼p on renewed speculation that Shell, 1½ higher at 493p, may be considering an offer. Dealers also noticed that last week US broker Sanford C Bernstein turned bullish on the stock.

Others laid money on D&G. an insurer of extended warranties largely to the manufacturing sector, being the next takeover target. The stock surged 88 to 903p as a hefty 3.6m shares changed hands, against the usual average of nearer 200,000. Dealers noted Man Financial had taken a 4.9pc stake in the company, and gossiped that an offer as high as £10.50 a share may be on the cards. However, sources close to the company said no approach had been made.

The benchmark FTSE 100 reclaimed the 5000 level, rising 25.2 to 5000.2. The FTSE 250 put on 5.9 to 7263.3. As London closed, the Dow Jones had shed 25 points. Volumes were a respectable 3billion shares, despite many traders being away at the Cheltenham horseracing festival.

Traders said they are expecting some points to be knocked off the FTSE 100 today as a number of heavyweight financial stocks go ex-dividend. These include Royal & Sun Alliance, Prudential, HBOS, Lloyds TSB and Aviva.

The Debt Management Office announced it will hold an auction next Thursday for £2.5billion of Treasury 4¾pc 2020 - the first new 15 year-gilt auctioned by the DMO since it was formed in 1998.

This will be the last auction in the current remit, with financing plans for 2005-06 to be announced in today's Budget. The results of the ultra-long gilt consultation for 50-year bonds will also be announced.

Shire Pharmaceuticals rose 11½ to 598p as Goldman Sachs repeated its inline recommendation on the drugs giant.

Pub chain Scottish & Newcastle ticked up 7 to 454p on vague speculation that brewer SAB Miller might be mulling an offer. Deutsche Bank also repeated its buy rating on S&N.

Smith Barney upgraded its rating on Capita, the outsourcing company running London's congestion charging scheme, from hold to buy. The broker also lifted its price target from 370p to 430p, causing the stock to rise 4½ to 373½p.

Logistics group Exel rose a further 4½ to 887p as ABN Amro increased its target price from 850p to 895p. Hopes of a bid have persisted though dealers reckon a hostile takeover is unlikely.

Man Group, up 17p to £14.70, said the German regulator BaFin is probing the accounts of Phoenix, a client of its brokerage arm, after discrepancies were found. The hedge fund added: "We have undertaken a detailed review of our records and are satisfied there are no irregularities of any kind at any Man Group company."

Mining group BHP Billiton said Deutsche Bank no longer has a notifiable interest in the company. The shares eased 9 to 730p.

In the FTSE 250, Credit Suisse FB lifted its price target on aerospace group Cobham by £1 to £14.50. The shares rose 34p to £13.90.

Capital & Regional, the property asset manager, posted its full-year results and rose 13 to 720p.

British Vita, the furniture foam maker being stalked by Texas Pacific Group, continued to trade at a premium to the US private equity group's indicative proposal of 353p a share.

Dealers hope, now TPG has access to Vita's books, it may return with an offer near 375p a share. British Vita edged up ½ to 354p.

Nightclub operator Luminar fell 13½ to 497p.

Equipment rental hire group Ashtead rose 6½ to a 42-month high of 99¾p after the group unveiled third-quarter pre-tax losses reduced from £14.6m to £1.4m. Chief executive George Burnett said: "Current trading conditions are good in all our markets."

Investment bank Shore Capital rose 1 to 41¼p after full-year pre-tax profit climbed from £2.1m to £6.5m. Chairman Howard Shore said the year had started well all round.

On Aim, Mayborn Group was lifted 16½ to a high of 336½ after the babycare group posted a full-year pre-tax profit of £8.7m, up from £6.9m last time.

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