Takeover talk fizzing over at Cadbury Schweppes

CADBURY Schweppes is one of a string of corporate household names that has been linked to takeover activity by the bid-hungry market in recent weeks.

A possible bid for the chocolate and fizzy drinks giant from US food group Kraft has been mooted, with Coca-Cola and PepsiCo also rumoured to be sniffing around a potential deal.

There has even been a suggestion that Cadbury will stage a preemptive bid for French dairy group Danone to help retain its independence. That talk was partly prompted by Danone’s recent comments that it would not welcome a hostile bid, leading some traders to speculate that this could mean it had already received a tentative approach. The bubbling rumours are likely to distract from the company’s full-year results this week, which will show that profits have risen from 892m to about 930m.

Cadbury, whose brands range from Dairy Milk chocolate to Halls cough sweets, is expected to say it had enjoyed a good second-half performance, which is important since 60% of total revenues are generated in the second half of the year.

It is likely to say on Wednesday that its Adams confectionery business, where product innovation has supported volume growth, and its US drinks operation, which has grown its market share, drove the performance.

But with the recent takeover speculation having already sent the shares higher, dealers believe the stock is looking a bit pricey. Some analysts have been advising clients to sell as soon as the bid rumours gather pace again.

Leaving aside the mega-profits from Royal Bank of Scotland, there is no shortage of corporate news this week, with one of the heaviest spells of corporate news flow of the year looming for investors.

There is also a fair amount of economic data. Some economists expect fourth-quarter GDP figures to be revised up to quarter-on-quarter growth of 0.8%, from the previous figure of 0.7%.

But the minutes of the Bank of England’s Monetary Policy Committee are expected to show that the rate-setters voted unanimously in their February decision to keep interest rates on hold at 4.75%.

Housebuilder George Wimpey announces its full-year results on Tuesday. In its pre-Christmas trading statement it promised record results thanks to a 9% increase in average selling prices, and analysts expect pre-tax profits to have surged from 364m to 442m - which equates to 78.6p a share.

The fact that the shares, at 429.5p, trade on just 5.5 times historic earnings suggests that the City has its doubts about the outlook for the residential property market.

One of the City’s problem children will also be briefing the market. And analysts expect things to get worse before they get better for troubled pest control-to-washroom services group Rentokil Initial.

The company is expected to report on Thursday that its two core divisions, hygiene and pest control, have faced tremendous competitive pressure in their respective markets. Pre-tax profits are expected to be 355m against 409m beforehand.

The results are not expected to give a clear indication of whether increased investment is bearing fruit, with the next interim results likely to be more informative. Although the group has just appointed new chief executive Doug Flynn, broker Gerrard is not expecting any significant change in strategy before the end of the year. "We remain wary of Rentokil," Gerrard said.

The City will be keen to see the first results from Goals Soccer Centres, the Scottish-based five-a-side football company, since its December flotation on the Alternative Investment Market.

The shares have almost doubled from the issue price of 59p a share. The listing has already proved highly lucrative for Edinburgh-based Dunedin Capital Partners, which reaped about 15m from the Goals float - more than doubling its original investment of November 2000. Dunedin provided equity finance for a management buyout and then helped the firm expand from five football centres to 11.

Alliance Unichem, Europe’s second-biggest drugs distribution group, also steps into the market this week.

Underlying earnings are expected to rise 13%, boosted by demand for higher-margin generic drugs and advisory services at chemists.

But analysts will also want reassurances that strong growth can continue, particularly after an approximate 50% rise in the firm’s shares since the start of 2004.

Pre-tax profits are expected to rise 18% to 247m on a 4% rise in turnover to 9.14bn.

Alliance Unichem said in December its wholesale operations had traded in line with expectations, benefiting from cost cuts and growing demand for generic drugs, on which it generally makes higher profit margins than branded medicines.

Its retail operations, which include the Moss chemists chain, had achieved "excellent results", driven by demand for services such as dietary advice, cholesterol monitoring and classes on how to stop smoking.