Speculators Board P&O on Talk of Bid from Singapore; Market Report

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Byline: MICKEY CLARK

CITY speculators were building up a full head of steam yesterday as they set course for shares of P&O, one of the best performers among second-line companies.

The shares climbed almost 8% as more than 22 million changed hands on talk that a bid may be on the horizon. Word is that Singapore government investment arm Temasek may be building up a sizeable holding in the international ports and UK ferries operator.

P&O never comments on market speculation but brokers pointed out that Temasek would have to put out an announcement if it held more than 3% of the shares.

The speculators say the latest flurry of activity has been sparked by the [pounds sterling]2.3 billion takeover of Royal P&O Nedlloyd, in which P&O has a 15% stake, by Denmark's Moeller-Maersk. Broker UBS reckons Temasek is contemplating a strike on P&O to block a similar move by Maersk. It argues that P&O Nedlloyd is a big customer of the Port of Singapore and may choose to re-route its ships through ports operated by Maersk.

But brokers say it is unlikely Maersk would be interested in P&O's ports operation. The speculation also coincides with the departure of Lord Sterling as chairman of P&O. If Temasek did buy P&O, it would create the largest ports operator in the world.

Elsewhere, investors were cheered by a clutch of big-name companies announcing bumper profits. BT's full-year figures were at the top end of analysts' expectations, with the promise of more cash for shareholders.

Pubs chain Mitchells & Butlers posted bumper earnings and a strong like-for-like sales increase.

Shareholders in Mothercare also had reason to celebrate, with a dividend total doubled to 8p. The retailer is two years into its threeyear recovery programme and chief executive Ben Gordon remains confident about prospects for the year ahead despite the general spending squeeze. …