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Daily Telegraph: Centrica goes on the boil as traders speculate about a bid approach: “Traders said that potential bidders could also include Royal Dutch Shell…": Thursday 25 August 2005


Takeover talk lifted British Gas owner Centrica yesterday as traders speculated that the company would be the latest recipient of a bid approach.


Norwegian group Norsk Hydro has previously been rumoured to be interested in a merger with Centrica but both companies denied being in talks.


Traders said that potential bidders could also include Royal Dutch Shell, BG Group and Gaz de France. Centrica declined to comment.


The shares gained 9¼ to 252¾p yesterday with more than 107m shares changing hands.


There was also vague bid talk surrounding engineering group Laird, which traders said could be targeted by a US bidder. The shares rose 7 to 343p.


The FTSE 100 ended the day down 25 at 5275.2 as a number of blue-chips went ex-dividend, including electricals retailer Dixons, Scottish & Southern Energy and Pearson, publisher of the Financial Times.


Strong results from miner BHP Billiton were not enough to lift the shares, which closed down 31 at 804p on profit taking. Analysts said the company was a consistently good performer and the results did not show anything the market hadn't seen before. However, some said the market had been hoping for a larger dividend rise and that the company's outlook statement was a little subdued.


The news had an impact on the rest of the mining sector with Rio Tinto down 69 to £19.67, Anglo American off 38 at £13.74 and Antofagasta down 35 to £14.56. Angus Campbell of Financial Spreads said: "The mining sector has been weighing on the index though it's about time they had a bit of profit taking."


Also in the FTSE 100, Sage Group lost 3¼ to 230¾p as Merrill Lynch highlighted concerns over a new rival accountancy software product from Microsoft, traders said.


Ratcatching-to-office plants group Rentokil fell 2 to 162¼p ahead of first-half results today.


Goldman Sachs yesterday forecast higher cost savings for telecoms group Cable & Wireless after its acquisition of Energis and adjusted its earnings per share forecasts. The shares ended the day down 1¾ at 151½p.


Plumbing and heating products supplier Wolseley rose 22 to £11.42 after Numis Securities raised its rating to add from hold on the back of good news from Wolseley's US peer Hughes Supply this week, traders said.


There was good news for Shire Pharmaceuticals which gained 11½ to 686p as the drugs giant said its attention deficit and hyperactivity disorder medicine Adderall XR had been reinstated in Canada. The drug, which accounts for a significant portion of Shire's turnover, had been withdrawn in February amid safety concerns.


Supermarket retailer Tesco gained 1½ to 325¾p as Merrill Lynch raised its price target on the stock to 355p from 335p ahead of the group's first-half results in September. J Sainsbury was lifted 1¼ to 284¾p.


Leisure group Whitbread gained 5 to £10.04½ on reports that its Costa Coffee chain plans to open more than 300 outlets in India to target the country's young, affluent middle class.


Packaging group Rexam rose 2¾ to 499p ahead of first-half results today. The company also named David Robbie, formerly P&O Nedlloyd finance director, as its new finance director.


Among the second-liners, Bodycote gained 5 to 211p a day after the heat treatment specialist's first-half results. Deutsche Bank upgraded the stock to buy from hold while Lehman Brothers maintained Bodycote at overweight.


Housebuilders were strong as Persimmon added to previous gains as both CSFB and ABN Amro raised their price target on the company, traders said. It rose 22½ to 862½p. In the same sector, Redrow gained 9¾ to 414¾, Wilson Bowden put on 24 to £11.50 and Barratt Developments rose 16 to 716p.


Insulation group SIG ticked up 16 to 670p as Shore Capital upgraded the stock to buy from hold ahead of its first-half results next month, traders said.


Premier Farnell, the industrial products distributor, fell 2¼ to 174¾p as CSFB said the stock looked too expensive after its recent rally.


Traders said volumes were heavy in Ultrasis, a provider of interactive healthcare products. The shares rose 0.13 to 2.30p and have had a good run recently though on Tuesday the company said that it knew of no reason for the movement in the share price.


There were also heavy volumes in software company Superscape which gained 1 to 29p on speculation that a bid for the company was about to be put on the table.


Aim-listed media group Ten Alps rose 5¾ to 50p as the company said sales were expected to rise 65pc in the first half.


Online gambling group PartyGaming slipped 5 to 163½p, though the company is now bigger than Marks & Spencer by market capitalisation.


The company, which only floated two months ago, is expected to enter the FTSE 100 at the next reshuffle.


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