FINANCIAL TIMES: Shell bid rumours boost Footsie: “The London market gained for the third straight day yesterday amid rumours Shell might be considering a significant acquisition.”: “Shell was linked as a possible bidder for Woodside, the Australian oil and gas company with a market capitalisation of £7bn. Analysts said a deal was possible. Shell owns 34 per cent of Woodside and had a takeover attempt rebuffed in 2000.” (ShellNews.net) 8 April 05

By Robert Orr, Chris Flood and Tom Braithwaite

Published: April 8 2005

The London market gained for the third straight day yesterday amid rumours Shell might be considering a significant acquisition.

With further oil and gas deals expected following ChevronTexaco's $18bn purchase of Unocal this week, Shell was linked as a possible bidder for Woodside, the Australian oil and gas company with a market capitalisation of £7bn. Analysts said a deal was possible. Shell owns 34 per cent of Woodside and had a takeover attempt rebuffed in 2000.

Shell was a leading blue-chip riser, up 2.5 per cent to 496p. It was boosted by higher crude prices and news that the first oil had been shipped from its Salym field in Siberia. Sibir Energy, Shell's Aim-listed partner in the Salym project, rose 5.9 per cent to 207½p.

Talk of bids in the sector to come also boosted the long-speculated target BG Group, up 2.6 per cent at 430¼p. The FTSE 100 rose 0.6 per cent to 4,977 while the mid-cap FTSE 250 added 0.3 per cent to 7,239.5. Sentiment was boosted by the Bank of England's decision to keep UK interest rates on hold. Trading volumes of 3.3bn were average.

The steelmaker Corus topped the FTSE 100 gainers, up 2.8 per cent to 55½p, buoyed by positive results from Alcoa.

Boots fell 0.6 per cent to 615½p as investors digested a second profit warning from the pharmacist this year. With costs up and sales falling, Boots said operating profits for 2005-06 would be lower. On the upside, it plans to sell its Boots Healthcare International division, valued at about £1bn, and return a "significant proportion" of the proceeds to shareholders.

The proposed sale of BHI knocked SSL, the healthcare group seen as a bid target. It fell 2 per cent to 294p. Traders speculated SSL's potential predator, Reckitt Benckiser, could now turn its attention to BHI instead. Reckitt firmed 0.5 per cent to £17.08.

The car and cycle parts group Halfords rose 1.2 per cent to 300p after it reported higher like-for-like sales.

Barclays moved 0.4 per cent higher to 553p, with some traders suggesting the bank could look to do a deal in Italy, where ABN Amro and BBVA of Spain are pursuing acquisitions.

Also boosted by bid talk was the medical devices maker Smith & Nephew, up 1.8 per cent to 528p, although this was largely dismissed. "Every time the shares go up, back come the bid rumours," said one dealer.

East Surrey Holdings added a further 10.1 per cent to 523p after the regional utility group confirmed it was in talks that could lead to an offer worth 535p a share, including a 10p dividend. Such a price would equate to about £453m.

The news boosted Northumbrian Water, up 2.9 per cent to 186¾p, Bristol Water, 5.1 per cent higher at 672½p, and Dee Valley Water, up 2.3 per cent to 872½p.

Investec rose 3.9 per cent to £16.43 after the London-listed South African financial services group said earnings could rise by up to 38 per cent this year.

Shares in easyJet gained 4.3 per cent to 224p after the budget airline reported a 29 per cent jump in passenger numbers last month. Some 2.6m people flew easyJet in March, while its load factor, a measure of how full its aircrafts are, rose 4.3 percentage points to 86.9 per cent.

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