Compass Rumours Point to a Surprise Ahead ; MARKET REPORT
Dewson, Andrew, The Independent (London, England)
Compass Group, the world's largest contract caterer, has had a difficult time over the past few years. The stock still trades at a discount to its March 2004 value, since when the blue chip index has risen more than 24 per cent. However, the rumours are that senior management has had enough and will offer shareholders 370p to take the company private.
Although the stock has rallied well over the past two years it still lags behind the rest of the market and traders are speculating that more value could be made of the company if it were in private hands. Trading volume was not massive yesterday, indicating that a statement may not be imminent, but with the market focused on other deals, including J Sainsbury, Cadbury Schweppes and Whit-bread, some traders believe that Compass may be ready to surprise investors. One said: "Compass stories have done the rounds before but with the stock showing signs of life now could be the time to make shareholders an offer." The shares rallied 5p to close at 316.75p.
The interdealer broker ICAP has survived the recent market turmoil better than most, but the stock went into overdrive yesterday, closing 29.5p firmer at 522.5p. The talk is that the chief executive, Michael Spencer, may be tempted to sell his stake and devote more time to politics. Inevitably, traders began speculating that a sale of Mr Spencer's 21.7 per cent could lead to a full bid for ICAP, with a price of 700p per share doing the rounds. Early nerves over interest rates sent the market 30 lower in early trade but corporate activity speculation soon encouraged traders in. The FTSE 100 closed 30.9 better at 6220.3, with a positive start to trade in New York underpinning gains in London.
Bid speculation s u rrounding Mitchells & Butler and Whitbread brought the pub sector back into focus. Punch Taverns topped the mid- cap leaderboard with a 52p gain to 1,193p, Greene King closed 19p firmer at 1,124p and JD Wetherspoon added 26p to close at 736p. Meanwhile, rumours of a Robert Tchenguiz-backed bid for M& B continued to drive the shares higher to close 28p better at 787p, yet another new all-time high.
Mid-cap oils were mixed f ollowing a strong set of numbers from JKX Oil & Gas, as it told investors that full-year pre-tax profits rose more than 110 per cent to $109.2m. Profit-taking saw the shares close 9p worse at 298p. However, the hot story doing the rounds is that a Middle Eastern bidder is preparing an offer for Premier Oil after it reports results on Thursday. The word is that an offer in the region of 1,700p per share will persuade management to sell. Despite the chat, the shares shed 11p to close at 1,194p.
Merrill Lynch gave clients a bullish update on the house building sector, despite widespread concerns over the value of US land banks among those that have US exposure. The US investment bank upped Bellway and George Wimpey to "buy", telling clients: "We would maintain that the underlying message coming though from the past few weeks is a reassuring one." The shares rose 14p to 1,476p and 6p to 590p respectively.
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Publication information: Article title: Compass Rumours Point to a Surprise Ahead ; MARKET REPORT. Contributors: Dewson, Andrew - Author. Newspaper title: The Independent (London, England). Publication date: March 21, 2007. Page number: 56. © 2009 The Independent - London. Provided by ProQuest LLC. All Rights Reserved.
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