Yesterday's trading: Urge to merge hits High Street
It doesn't augur well for the High Street when the number of people out of work in the UK exceeds two million for the first time in a decade of Labour rule.
Geoff Foster: Daily Mail
Rising unemployment always brings about an inevitable fall in consumer spending, resulting in declining retail sales. For those shopkeepers who are already struggling to keep the wolves from the door, the urge to merge could become greater in the coming months.
Topps Tiles, Britain's biggest tile and flooring company, has also been hit by the demolition of the UK housing market over the past 18 months or so and continues to struggle. The shares eased 1p further to 25¾p but revived whispers in the trade suggest a bid could be just around the corner.
Lord Harris of Peckam's Carpetright, 6½p cheaper at 459¾p, has always been the name in the frame. Indeed, the carpet king admitted in January that Topps was on his shopping list but he would not make a move for at least a year. Perhaps he's changed his mind believing he could now swallow it at a basement price.
Trading above £3 a share two years ago, Topps touched an all-time low of 15p earlier this year. Co-founder and chairman Barry Bester last bought 2m shares at that level in January, concluding a three-month buying spree which saw him hoover up 5.67m shares at an average price of around 16½p.
Topps was hit last month by news that Euler Hermes, one of the providers of credit insurance to its suppliers, withdrew credit insurance cover.
On the other side of the street, indebted department store chain Debenhams rose 2¼p to 43¼p. Singer Capital Markets advised clients to buy after touring the new Westfield store with management. Analyst Matthew
McEachran says the new store is trading to plan since opening before Christmas last year, which is no mean feat in this environment. Having been through a downgrade cycle of 40% over the last two years, Debs is now entering turnaround mode with a momentum shift already evident.
Trading worries slammed car parts firm Halfords into reverse. The close was 19¾p down at 266¼p.
The Footsie lost a 44-point gain to trade 88 down following the worst UK unemployment data since 1971. It raised fears of a severe recession for the rest of this year at least and probably into 2010. The close was 52.11 points lower at 3804.99. Wall Street lost 138 points as dealers awaited news from the Federal Open Market Committee Meeting and it closed up 90.88 at 7486.58. Meanwhile, shares of Sun Microsystems soared on confirmation it is in advanced merger talks with bigger rival IBM.
The latest Merrill Lynch Fund Managers survey showed investors at their most optimistic about the global economy since December 2005. But the prolonged banking crisis is stopping them from buying equities.
Banks yesterday shrugged off the FSA's new rules on lending and curbs on excessive risk taking and focused on Bank of America boss Ken Lewis's comment that he expects the US banking giant to make a profit in 2009.
Barclays jumped 4.7p to 96p and Royal Bank of Scotland 0.9p to 23.1p.
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Private equity group 3i, which gets relegated to the FTSE 250 on Monday, rose 8½p to 219½p. Dealers heard it could have been the one that sold Centrica (¾p dearer at 247p) a 5% stake in Venture Production, 154p better at 734p. Centrica increased its stake in VP to 22.3% after buying 33m shares at 725p a share and is strongly tipped to bid the rest. Sold down to 85¾p on news of the £341m placing and open offer, SIG rallied strongly to end only 4p cheaper at 101p. Martin Hughes' Toscafund has taken a 5% stake in the placing. Now that the balance sheet has been bolstered and debt reduced, dealers reckon a bidder will come calling.
Anglo American lost a 40p gain to close 4p off at 1112p after selling its remaining 11.3% stake in AngloGold Ashanti to Paulson & Co for $1.28bn cash.
UK business adviser Tenon rose 3¼p to 46¾p following a 15% leap in first-half profits to £4.7m and earnings per share 12% higher at 2.46p. FinnCap says buy and believes the company is well positioned to continue expanding.
Pleasing annual results lifted Alkane Energy 1¾p to 16½p. Pretax profits soared 128% to £1.95m on revenues 21.5% higher at £5.2m. Gartmore has increased its shareholding to 27.1%.
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