Wal-Mart Joins the Queue for Sainsbury's ; MARKET ROUND-UP

Article excerpt

US RETAIL giant Wal- Mart has emerged as another potential suitor for the UK's third-largest supermarkets chain J Sainsbury.

Wal-Mart, which owns Asda in this country, is reported to be sounding out the Competition Commission to see whether it would be allowed to proceed with a bid. City speculators welcomed the news today, lifting Sainsbury's shares 21/2p to 551p.

Terms of a bid fromthe CVC Capital Partners consortium that is expected to offer about 558p a share, are still awaited. That figurewould value Sainsbury's at almost Pounds 10 billion. The consortium, which also includes Blackstone and Kohlberg Kravis Roberts, has until 13 April to come up with its terms.

Share prices generally bounced back from yesterday's sell-off, the FTSE 100 index rising 40.9 to 6332.8. Once again, the miners, led by Kazakhmys, up 28p at 1181p, made most of the running.

Oil industry services group John Wood marked time at 287p. Chairman and chief executive Sir Ian Wood plans to sell up to 50 million shares, or almost 10% of the company. The move followed advice that he should diversify his investments. The sale will reduce his holding to 24%, but he insists he has no intention of selling any more shares in the next year.

Drinks giant Diageo was one of the best blue-chip performers, jumping 18p to 1023p. Dresdner Kleinwort has raised the shares from hold to add with the target-price lifted from 1040p to 1090p. The broker attributes the upgrade to positive organic growth forecasts. It sees no slowdown in the trends of first-half results among the stronger markets, and feels some of the weak spots are now faring slightly better. There is scope for an upgrade to profit forecasts.

HSBC has upgraded United Utilities, up 7p at 7481/2p, from underweight to neutral and jacked up its price target from 758p to 821p. The broker has also downgraded Severn Trent, off 6p at 1429p, from neutral to underweight and slashed its target price from 1502p to 1400p, while repeating its neutral stance on Kelda, 1p lighter at 938p, where its price target is cut from 1016p to 988p. It also remains neutral on Pennon, 3p dearer at 578p, but has tweaked its target from 591p to 598p. HSBC said it believes 2007-8 is a pivotal year for the UK water sector, with Kelda, Pennon and Severn Trent all having delivered more efficient balance-sheet structures.

New York investors had to endure another volatile session that saw share prices make a drab start to the week.

Another drop in new housing starts in the US had investors on the run amid fears there would be more fallout from the sub-prime mortgage market collapse. …