Bid talk and Shell shake-up help Footsie

Financial Times: Bid talk and Shell shake-up help Footsie

By Robert Orr and Chris Flood

Published: Saturday July 23 2005

The London market ended a week that saw the historic unification of the Royal Dutch Shell oil company fractionally higher.

The blue-chip FTSE 100 gained 0.2 per cent last week, closing at 5,241.8 yesterday after a 20.2 points, or 0.4 per cent, rise on the day.

Yesterday’s rise of 28.4 points, 0.4 per cent, helped the broader FTSE 250 firm 0.3 per cent over the five-day period. It closed at 7,495.8.

While Royal Dutch Shell now trades as a single entity, accounting for about 8.2 per cent of the FTSE All Share, it somewhat confusingly has two shares quoted on the London Stock Exchange.

Shares in the Dutch company were converted into ‘A’ shares while ‘B’ shares were derived from Shell Transport & Trading, the UK business.

The ‘A’ shares ended at £17.48 yesterday, down 0.3 per cent, while the ‘B’ shares slipped 0.2 per cent to £17.95

The week was rife with bid speculation, with utility Scottish Power, catering company Compass Group, plasterboard maker BPB, Exel, the logistics company, and discount retailer Matalan all subject to takeover talk.

In yesterday’s market, attention was divided between bid rumours, the second day of the first Ashes test and ongoing security scares on the capital’s transport system. The latter two contributed to the low volumes of 2.5bn.

Compass rose 4.8 per cent to 252½p on talk that Raphoe Management, Sir Gerry Robinson’s investment vehicle which aims to acquire poorly performing companies, was eyeing the company.

Sir Gerry is a former chief of Granada, which briefly merged with Compass in 2000 before a split the following year.

However, analysts were not convinced. Cazenove took the opportunity to cut Compass from “inline” to “underperform” while Dresdner Kleinwort Wasserstein’s Karl Green said Raphoe would “struggle to achieve much more than is already in train or currently being considered” by the Compass board.

Meanwhile, BPB added a further 6.9 per cent to 693½p following its 26.5 per cent jump on Thursday when France’s Saint-Gobain said it had approached the world’s biggest plasterboard maker.

Noting a lack of synergies from the proposed deal, Paul Roger at Deutsche Bank suggested a take out price of 675p, although his counterpart at Dresdner thought Saint-Gobain may need to go high as 750p.

Building materials group Hanson put on 2 per cent to 558½p on hope it would be next to be snapped up.

Exel gained 1.5 per cent to 937½p as Switzerland’s Kuehne Nagel joined the list of suitors rumoured to be stalking the company. UPS and Deutsche Post have been linked in the past, although ING analyst Kevin Lapwood thought the latest name in the frame less likely.

“Kuehne Nagel would have to issue paper to buy Exel. Why would Exel shareholders want Kuehne Nagel paper?,” he asked.

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