FTSE drifts despite Alliance rumours

Published on Tuesday 28 March 2006 13:51

BRITAIN'S benchmark FTSE 100 Index struggled for direction today as shares lifted in Alliance & Leicester on fresh speculation that it may fall to a foreign predator.

The bank was tracked on the risers board by hedge fund firm Man Group after Credit Suisse lifted its target price to 2450p from 2200p. Man Group shares were up about two per cent to 2393p.

But this failed to stop the Footsie drifting about three points lower to 5969 in late morning trade as gains in ITV from last week were reversed.

Alliance is understood to be the target of French bank Credit Agricole, which has made no secret of its desire to swallow a European rival. Shares in the bank cheered two per cent to 1190p after analysts said Alliance has turned down an offer of 1300p a share.

Shares in Argos owner GUS were down two per cent to 1086p after it said it is to separate its retail business from credit-checking arm Experian.

GUS said the split would be through a demerger with Argos Retail Group (ARG) and Experian independently listed on the London Stock Exchange.

ITV dropped about one per cent as traders waited for a private equity consortium - Apax Partners, the Blackstone Group and the investment arm of Goldman Sachs - to come out with a possible second bid. This offer is understood to include a cash alternative.

Shares in Standard Chartered fell almost four per cent after Singapore's Temasek bought a 2.3 billion minority stake in the Asia-focused bank, dampening the prospect of a takeover bid.

Temasek announced late yesterday that it would buy an 11.6 per cent stake in Standard Chartered from the estate of late banking tycoon Khoo Teck Puat. Analysts doubt that the secretive investment firm would sell the stake in the short term.

"The change in investor should reduce takeover talk that has surrounded the stock and we reiterate 'sell'," analysts at Dresdner Kleinwort Wasserstein said in a research note.