Riding for a fall? That was the question on the minds of market professionals as the Debenhams share price traded above Permira’s indicative offer price for the first time.<\/p>\n
The private equity firm, which recently sold Homebase to GUS for pounds 900m, has been working on a bid for Debenhams since May, when it announced that it was – subject to certain conditions – ready to pay 425p a share in cash for the department stores group.<\/p>\n
In brisk trading yesterday Debenhams shares rose above that level, closing 8p higher at 433.5p, basically on speculation that Permira will increase its offer to at least 450p.<\/p>\n
Senior City traders are worried that the market has got it wrong and that Permira will not be bounced into paying more than 425p for Debenhams by this week’s strong trading update. On Tuesday, Debenhams announced that like for like sales in the 20 weeks to July 20 were up 3.8%, a performance that put many of its peers to shame.<\/p>\n
They are also sceptical that another offer would emerge, citing rumours that rival venture capitalists CVC and Texas Pacific – which are also working on a bid – have yet to secure funding.<\/p>\n
In the wider market, leading shares hit their highest level in five weeks, boosted by better than expected interim results from AstraZeneca , up 58p to pounds 25.08, a dividend increase from Legal & General , 4.5p higher at 92.75p, and a strong performance from index heavyweight Vodafone<\/p>\n
In a trading volume of 450m shares, the mobile telecoms operator gained 5p to 117.5p on speculation that market makers at a large US investment bank have decided to close a huge short position.<\/p>\n
With a buoyant Wall Street helping London’s cause, the FTSE 100 index finished 63.1 points higher at 4,149.6, taking its gains over the past three days to 105 points.<\/p>\n
The FTSE 250 gained 35.2 points to 5,224.7, while the FTSE Small Cap index rose 12.8 to 2,230.8. Market turnover was good, with nearly 2.9bn shares changing hands. However, trading in just three stocks – Vodafone , AWG’s redeemable dividend shares and MM0 2 , up 1.25p to 52.25p – accounted for about 30% of that total.<\/p>\n
In the bond market, gilts were under pressure following strong retail sales data, which dampened hopes of rate cuts. The benchmark 10-year gilt closed at 129.120, yielding 4.415%.<\/p>\n
Back among the blue chips, the insurance sector was the day’s top performer, with Aviva rising 21.5p to 489p and Prudential climbing 17p to 426p. Both benefited from Legal & General’s decision to increase its interim dividend by 2.6% and announcement that new business profits were pounds 162m. Most City analysts had been forecasting a figure closer to pounds 130m.<\/p>\n
Retail conglomerate GUS gained 10p to 739p after its six non- executive directors declared the purchase of a total of 30,500 shares.<\/p>\n
Lower down the market, Galen Holdings was in good form again, rising a further 6.5p to 615p on speculation that American group Johnson & Johnson is looking at the Northern Ireland drug maker. On Monday, Galen, which specialises in women’s healthcare products, slumped 110p to 595p after takeover talks with US rival Barr Laboratories were unexpectedly terminated.<\/p>\n
Takeover speculation was also swirling around Securicor , which gained 6.5p to 76.5p in above average volume of 29m shares. However, market professionals reckon yesterday’s gain was triggered by the clearance of a stock overhang and buying by hedge funds, which have noticed that Securicor shares bounce sharply whenever they hit 70p.<\/p>\n
Colt Telecom was another big FTSE 250 riser, advancing 4.25p to 78p after heavyweight American broker Morgan Stanley upgraded on the back of Wednesday’s strong second quarter figures.<\/p>\n
Insurance broker Jardine Lloyd Thomson gained 7.5p to 591.5p. Dealers reckon that Monday’s interim figures will prove impressive.<\/p>\n
Among the small caps, Su perscape , the designer of software for mobile phones, rose 2.5p to a year’s high of 24p on speculation of another big contract win. Superscape recently signed up Siemens for its Swerve software.<\/p>\n
Computer games company Eidos improved 8p, or 7%, to 120p after joint house broker Evolution Beeson Gregory advised clients to take advantage of recent weakness and buy.<\/p>\n
Concern about the performance of its new Lara Croft game, Angel of Darkness, in the US has seen Eidos shares slide almost 15% during the past 10 days.<\/p>\n
Evolution analyst Peter Read is confident that the game will be a success. “The second Tomb Raider film launches in the US tomorrow. Historically, high profile film launches have boosted sales of accompanying games and we are confident the title will achieve the 2m unit sales we have forecast,” Mr Read said.<\/p>\n
Regus , the provider of serviced offices, gained 1.5p to 35.75p, lifted by Wednesday’s late news that rival Marylebone Warwick Balfour , which gained 1.5p to 60p, had closed its five office centres in Holland and Germany and placed its four French centres into administration.<\/p>\n
Software group Merant was marked 4p higher at 148.5p on talk of a $25m American contract win.<\/p>\n","protected":false},"excerpt":{"rendered":"
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