Newspaper article The Evening Standard (London, England)

O2 Rings Up Record on New Talk of a Bid by Germans; MARKET REPORT

Newspaper article The Evening Standard (London, England)

O2 Rings Up Record on New Talk of a Bid by Germans; MARKET REPORT

Article excerpt

Byline: MICKEY CLARK

SHARES in mobile phones giant O2 nudged up another 3p to a new high of 1603/4p today as questions were again raised about its future.

O2 has seen a pickup in its fortunes this year, and that has led to intense speculation that it may soon become the target of a [pounds sterling]15 billion bid from Deutsche Telekom or Holland's leading provider, KPN.

Now it emerges that KPN may itself become the target of a bid pretty soon.

The Dutch phone operator set tongues wagging among speculators on the Amsterdam bourse by saying it came close to terms of a e20 billion ([pounds sterling]13.6 billion) offer from Spanish rival Telefonica five years ago. Word is those talks may be back on, leaving Deutsche Telecom, operator of T-Mobile, with a free run at O2.

Only last month, O2 raised its revenue forecasts and revealed it had grabbed market share. KPN made an approach to the UK-listed company last year but this was rejected.

Analysts say Deutsche Telecom would have to sell off O2's sizeable German operation if it proceeded with a bid.

Mobile telephone products group DAT tumbled 15p to 411/2p after warning it expects full-year sales to be at the lower end of a range of between [pounds sterling]3 million and [pounds sterling]4.5 million given in July. It is to trim its line to four core products as a result of its strategic review.

Broker Panmure has placed its hold recommendation and 140p target under review, noting that although the group's results beat its predictions, it expects to trim its forecasts in light of the revised spending plan.

News of the proposed Boots/Alliance UniChem and NTL/Telewest mergers provided the rest of the market with a further boost, although trading conditions were described as thin.

The FTSE 100 index climbed back above 5500 with a rise of 35.3 points to 5513.0 despite a nervous start to trading on Wall Street this afternoon where the Dow fell 1.90 to 10,566.80.

Boots jumped 271/2p to 636p while Alliance UniChem put on 22p at 8881/2p.

Broker WestLB has raised its rating on Boots from neutral to outperform.

Barclays rose 13p to 586p with buyers paying 640p for the call in the December traded options series. …

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