MARKET REPORT: Tate & Lyle up 5pc on bid talk

How sweet it is to be loved by hungry punters who think a tasty takeover could be just around the corner.

London-based multinational agri-business Tate & Lyle became the latest blue chip to attract hefty speculative buying on bid hopes. The shares climbed to 583p before closing 26.5p, or 5pc up, at 564.5p on well above average turnover of 34m.

Talk of a US cash bid worth £3.5bn or 750p a share got louder as the day wore on.

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Dealers initially heard that Cargill, the largest privately held company in the US, was now stalking Tates after selling its 64pc stake in fertiliser producer Mosaic for $24.2bn.

Archer Daniels Midland Company, a US conglomerate head-quarted in Illinois, was then put in the frame, but dealers quickly pooh-poohed that idea. 


The mutter from the gutter across the Pond later suggested that Bunge, which operates in the food and agriculture business worldwide and which has a market capitalisation of $10bn, is ready to launch an offer.

Last July, new boss Javed Ahmed, who came from Reckitt Benckiser, sold Tate's iconic sugar refining and golden syrup business to American Sugar Refining. He is well regarded in the City and will fight tooth and nail to retain the group's independence should a corporate attack materialise.

Meanwhile, shareholders will hope that Tate's forthcoming trading update does not disappoint or cause any dramatic upheaval in the share price which stands at an impressive 52-week high.

Profit-taking dragged the friendless Footsie 79.73 points lower to 5,976.70. Wall Street eased slightly at the opening following disappointing quarterly figures from US banking giant Goldman Sachs.

Drugs giant GlaxoSmithKline rallied 9.5p to 1191.5p after falling sharply this week on the revelation it expects to record a legal charge for the fourth quarter of £1.8bn post tax. Broker Killik advises clients to buy on weakness saying that at a time when returns from cash remain subdued, a well covered 5.5pc yield growing in excess of inflation provides investors with an attractive income while they wait for an unloved sector to return to favour.

Talk of a pending cautious circular ahead of next month's annual results left support services group Bunzl 20p off at 755.5p. Still believed to be on private equity players' shopping list, security group G4S relinquished 6.2p to 267.6p on profit-taking.

Shares of Imperial Tobacco, trading without entitlement to the 60p dividend, fell 97p to 1830p. British Airways dropped 12.6p to 287.7p ahead of its merger with Spanish airline Iberia.

Dealings in the reweighted International Airlines Group will take off on Monday. Fol lowing widespread medi a condemnation of the bank's outrageous behaviour in enticing elderly customers into gambling their life savings on the stockmarket and the ensuing record£7.7m fine from the FSA, Barclays ran into selling. It closed 11.6p lower at 296.15p. Part-nationalised bank Lloyds Banking Group shed 1.6p at 66.26p.

As Tesco lost 5.25p to 403.8p, broker Evolution Securities' analyst Dave McCarthy said that the time is right for new chief executive Phil Clarke to launch a major price repositioning, as it did both in 1977 and 1994.

He reckons that sooner or later, there will be a war for sales as the retailers try to justify the huge capital expenditure being spent on new stores and it makes strategic sense for Tesco to be the first mover.

Rival Wm Morrison cheapened 3.9p to 267.1p after Morgan Stanley downgraded to underweight and slashed its price target to 240p. Advising clients to switch into J Sainsbury (4.2p lower at 380.8p), the US broker said it is becoming increasingly concerned about Morrisons prospects in the short, medium and longer term.

Consensus 10pc profit growth for the full-year 2011-12 seems too ambitious with no space opened in 2010-11. Morrison could be a big loser in the 'race for space'.

Buyers climbed aboard black taxi cab manufacturer Manganese Bronze, 5p better at
45.25p, on hearing it has agreed an extension of credit terms with Geely Automobile. MB is now well positioned to return to profitability in 2011.

Ashley House added 2p at 29p after AH Medical Properties, its property partner, agreed to a £28.3m bid from Assura Group. On completion of the deal, £4m in cash is due to Ashley House which will significantly bolster its balance sheet.

Instem, a software provider to the preclinical healthcare market, rose 4.5p to 233p following an in-line trading update. Forte Energy edged up 0.4p to 9.46p after the uranium explorer said it plans to raise £9.35m to accelerate exploration and feasibility work on its West African uranium portfolio.

Broker Numis lit the blue touch paper under TT Electronics and the shares rocketed to a three-year high of 184.25p before closing 7.5p better at 179.25p. It has a 220p target price for the supplier of electronic components and sensors.

After a major restructuring over the past two years TT has now entered a phase of sustained growth which could see a doubling in profits in the next three years.

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