M&S: Exchange takes beating

By DAILY MAIL REPORTER
Updated: 19:00 EST, 27 May 2004

BILLIONAIRE Bhs and Arcadia retailer Philip Green had the City bubbling with excitement just before the 4.30pm close. He announced that he is considering a bid for Marks & Spencer, the troubled clothing and food giant.

Green made an approach below £3 a share about four years ago but walked away after scaring the M&S board half to death.

With rumours of a 440p cash and shares offer doing the rounds, M&S soared 69 1/2p before closing 54 1/2p higher at 345p, valuing the group at £8.8bn.

The Stock Exchange's controversial SETs electronic trading system almost blew a gasket as big buyers piled in and turnover swelled above 105m shares.

Other vulnerable High Street names moved up in sympathy. Babywear retailer Mothercare, often mentioned as a possible takeover target, rose 11 1/2p to 337 1/2p. House of Fraser, in which Scottish entrepreneur Tom Hunter and Icelandic retailer Baugur hold 10% stakes, rose 2 3/4p to 116 3/4p. Discount clothes group Matalan jumped 8 1/2p to 184 1/2p.

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The Footsie closed only 15.3 points better at 4453.6 despite Wall Street's early 112-point surge on an easier crude price - which dipped below $40 a barrel - and bullish economic data.

The US economy grew at a pace that was faster than originally reported in the first quarter and the increase in corporate profits last year was the highest in 20 years.

The economy grew at a 4.4% annual pace from January to March, faster than the 4.2% gain in April. News that initial unemployment claims fell by 3,000 to a seasonally-adjusted 344,000 in the week ended 22 May also allayed worries about a jobless recovery.

Traders in New York said it is not a forgone conclusion that the Fed will raise US interest rates when it meets on 29-30 June.

Sterling jumped to $1.83, while the euro edged up to 66.8p and $1.2261.

British Telecom buzzed 3 1/4p higher to 185 3/4p on some hefty switching out of mobile phones giant Vodafone, 1 1/4p dearer at 129 1/2p. Some analysts have a short-term target of at least £2 and believe BT is a better bet because of its cash flow and broadband's potential.

Nomura downgraded Vodafone to sell from neutral and slashed its target price to 100p from 130p. Analyst Mark James said its premium to its peers looks increasingly unwarranted. Full-year results were disappointing and Japan is going from bad to worse. Investors also switched into mmO2, up 3p at 96 1/2p.

Investment bank Collins Stewart Tullett jumped 18 3/4p to 443 1/4p as dealers gave the thumbs up to its proposed £130m purchase of privately-owned interdealer broker Prebon.

Buyers were all over vaccine group Acambis like a rash. It closed 11p better at 317p after Merrill Lynch upgraded to buy from neutral because there is an increased likelihood of a large US smallpox contract in 2005.

Engineer Wellington rose 5 1/2p to 133p following an upbeat annual meeting. The group has made an excellent start to the year and agreed the £6.5m sale of its freehold property at Hampton, south west London.

Alternative Investment Market-listed software group Systems Union gained 2p to 112p following its £12m acquisition of Australian rival Lasata.

Healthcare minnow Mediwatch rose 1 7/8p to 7 5/8p. UK sales have increased significantly over the second half of the year. It is on track to apply for regulatory approval for its point-of-care diagnostic system in Europe and the US next year.

Oystertec, the fluid connections developer, advanced 2 1/2p to 21 1/4p on the bullish tenor of chairman Angus Monro's annual meeting statement. Trading for the first four months of the year is ahead of expectations.

Sutton Harbour, which owns Plymouth City Airport and regional airline Air Southwest, soared 24p to 205p on good annual results and Natasha Gadsdon's appointment as finance director.