Market report - Monday close

By MICKEY CLARK FOR MAILONLINE
Updated:

 

Despite best efforts to play down reports that US retailing giant Wal-Mart is ready to launch a £6bn bid, retailer Boots was showing stock market bears a clean pair of heels today. Shares in the giant 1800-strong chemist chain raced up 16p to 516p as more than 10m changed hands.

Wal-Mart is reckoned to be worth more than most of Britain's High Street retailers put together and has been strengthening its position in Europe. Last year it paid £7bn for Asda supermarkets in a move seen as taking it head-to-head against the other big food retailers.

City speculators claim Wal-Mart wants the floor space offered by Boots and its Halfords chain. But Nick Bubb, retail analyst at broker SG Securities, says a bid by Wal-Mart for Boots seems unlikely.

'Boots is primarily an upmarket healthcareand-services-based company that would have little to attract the likes of Wal-Mart.'

But he admitted that the story did highlight how vulnerable Boots is. He said: 'It is on a P-E of 10 with a great brand, good cash-flow and a bright future. Anyone making a bid could pick it up cheaply and quickly sell off the likes of Halfords or its pain-killer drugs side.'

Share prices generally made a lacklustre start to the week.

The FTSE 100 index at the close was down 1.5 at 6542.2.

Merger partners Glaxo Wellcome, up 18p at 1985p, and SmithKline Beecham, up 6p at 900p, reversed earlier declines after speculation that Glaxo's Aids treatment Ziagen may have side-effects. But Glaxo said it planned to proceed with its launch of Trizivir, its new Aids drug containing Ziagen, in Europe later this year. Peptide Therapeutics rose 5p to 84 1/2p as talk of a bid worth 110p a share from Cantab Pharmaceuticals, 3 1/2p lighter at 310p, was again prevalent.

Diageo firmed 6p to 606p, although its joint £7 bn bid with Pernod Ricard for Seagram's drinks division appears to be running into opposition. It seems that the Seagram management wants to put together an offer of its own, while Allied Domecq, 7 3/4p firmer at 332 3/4p, may come in with a bid.

Fibernet Group, the communications specialist, jumped 95p to 1645p on a 'strong buy' recommendation from Deutsche Bank. It was impressed with interim results and is confident of a similar performance in the second half.

Freecom.net marked time at 55p. The e-commerce solutions provider is shedding the dot com image and changing its name to Systems Union Group. Chief executive Michael Williams resigned last week. Now followers of the company are hoping the recovery can begin.

There was big turnover of Express Dairies with 310,000 shares changing hands, although the price marked time at 72p. It was the first day of trading on AIM in shares of BioFocus after a placing by broker Teather & Greenwood. The group, which supplies integrated chemicals services, opened at 345p before racing up to a peak of 393 1/2p and then settling at 381 1/2p.

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