Market report: Wednesday close

By MICKEY CLARK FOR MAILONLINE
Updated:

 

TAKEOVER target Innogy saw heavy turnover in its shares overnight, resulting in almost 7% of the company changing hands. In one deal US securities house Lehman Brothers bought 74.4m shares from various institutions.

It later sold them on as part of a block trade, worth an estimated £200m, at 270p after the official close of business in London. This stretched total turnover in the shares to 174m.

The buyer of the stake is thought to be the German utilities giant RWE, which last month launched a £3.1bn agreed offer for Innogy worth 275p a share. Today we saw the other side of those bargains on the ticker as the trades were completed.

Brokers turned their noses up at suggestions of a counterbid. They said the purchase of the shares by RWE was designed to enable holders of Innogy shares to get their money and re-invest elsewhere. Approval for the takeover by the regulatory authorities is expected to take some time. Last year's acquisition of Powergen by another German utility group, E.ON, has still to be approved. Innogy shaded 1/2p to 270 1/2p.

There was also heavy turnover overnight in another bid target, Enterprise Oil, down 4p at 725p, after US securities house Schroder Salomon Smith Barney snapped up about 10% of the shares on behalf Shell Resources, a subsidiary of Shell, down 8p at 520p. Shell made an agreed offer worth £3.5bn, or 725p a share, for Enterprise on Tuesday. Some City speculators are confident that a counter-bid will materialise.

The bid for Enterprise and a strong oil price continued to buoy the rest of the sector, Cairn Energy adding 3 1/2p to 304 1/2p and Tullow Oil firming 3 1/2p to 110p. Broker UBS Warburg remains underweight in the sector and has repeated its 'hold' rating on BP, 1p up at 625p, and Shell. But it has increased its 12-month target price on BP from 515p to 570p and for Shell from 515p to 520p.

The rest of the market traded in narrow limits, most investors watching from the sidelines ahead of Thursday's decision on interest rates by the Bank of England's monetary policy committee. Sentiment was also affected by a fall of 0.5% in the Dow overnight in New York. The FTSE 100 index was down 3.6 at 5247.8 by close.

South African Breweries, up 2p at 495p, looked flat as talk in the City bars suggested it was poised to bid £3.5bn for US brewer Miller. Broker Credit Suisse First Boston says the deal would give SAB a better brand and distribution portfolio.

GlaxoSmithKline fell 26p to 1617p following bearish comments from Japanese house Nomura which is worried about the impact on its drug Paxil of cheaper generic versions. ICI slipped 3p to 331 3/4p. Today is the last time for trading in the nil-paid shares.

Property services specialist Mears Group, up 1/2p at 91 1/2p, cheered shareholders with a surge in pre-tax profits last year from £1.93m to £2.5m - the top end of brokers' forecasts.

British Energy fell 4p to 176p after broker Credit Suisse First Boston slashed its earnings estimates for the current year from 12.1p a share to 3.3p and for next year from 18p to 15.9p.

• Prices and indices in this section are supplied from various sources and calculated at different times and may not always match those listed on the site.

The Daily Mail's Geoff Foster on yesterday's trade
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