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Markets lift on back of takeover bids

BUSINESS WEEK TAKEOVER and merger activity towards the end of the week helped to dispel the gloom around the stock markets at the beginning of the week.

Before yesterday's Bank of Scotland takeover offer for NatWest, the Vodafone plans for a merger with Bell Atlantic began to ring the changes. The telecom companies' merger news of itself signalled a recovery in Eircom shares.

Further boosted by bargain hunting institutions, Eircom shares reversed their slide from their low last week of euro 3.67 and ended this week up to euro 4.09, though still well below their high of euro 5.30.

Other takeover talks also helped sentiment, including the notice from Hugh O'Regan of the Thomas Reed bar group that he was considering offering stg45p a share for the rival hotels and pubs chain Break for the Border. O'Regan's offer, which values BFTB at £19 million, is 25pc higher than the previous day's closing price for BFTB shares.

However, questions were raised about O'Regan's motivations as he also called for the postponement of the BFTB egm necessary to approve its £17.3 m. acquisition of O'Dwyers pubs and hotels.

The Thomas Read group's properties include 12 bars and cafes, including the Harbour Master, Pravda, the Morrison Hotel, Searsons and the Bailey.

If Regan were to buy BFTB before the latest O'Dwyer deal goes ahead, then Reeds would also add the Grafton Plaza Hotel, Break for the Border dance pub, Cafe en Seine, Major Toms and Sinnots bars to its chain. However, BFTB has rejected the offer as totally undervaluing its business.

The leisure sector also saw some buying and selling activity in the football end of the market. Dermot Desmond, who had earlier indicated an interest in buying Manchester United, is now flagging his plans to spend stg£7.84m to become the largest shareholder in Celtic plc.

Desmond is acquiring 2.8m of the 14.4m shares being sold by Celtic's former managing director Fergus McCann. This will increase Desmond's Celtic stake from 13pc to 20pc.

Meanwhile the bidding for Guardian Life has intensified, as Ark Life and Friends First were reported during the week to have made it through to the second stage in the race.

A further one or two more names, as yet unknown, also made it on to the shortlist, and the winner is expected to pay an excessive £70m for a company with only 1.5pc of the market. Meanwhile the merger activity in the banking sector saw reports surface that National Australia Bank has offered more than £300m for the state-owned corporate bank ICC.

Post merger activity can also help boost investor outlook. During the week Smurfit Stone sold its newsprint mill at Newberg, Oregon, for about $200m.

Since the merger of Stone Container and Jefferson Smurfit Corporation more than a year ago, the group has realised almost $1.8bn to cut debt and focus on core paper-based packaging activities.

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