Will Whitbread provide the fayre for one last big takeover hurrah before the rising costs of leveraged finance put a dampener on the bid fever that has gripped the City for nearly two years?
Traders believe that the owner of Premier Inn hotels, Beefeater restaurants and the Costa coffee chain is in the sights of Starwood Capital, the American investment fund that has a minority stake in the FTSE 100 leisure group. Whitbread shares rose 128p to a record £19.46, the biggest riser among blue-chip stocks.
Whitbread now has a market value of more than £3.6 billion. However, traders have pencilled in a full bid priced at between £22 and £24 a share, which would value Whitbread at more than £4.7 billion.
Blackstone’s recommended $26 billion bid for Hilton Hotels Corporation has set dealers musing on the next hotel target and the Premier Inn business is seen as a likely candidate. Whitbread, however, is understood to have asssured the Takeover Panel that it has received no approaches, while Starwood Capital would also have been forced to clarify its intentions.
“The absence of any statement suggests this is the usual hot air,” said one analyst, who added that it was more likely that Starwood Capital would make a move for Starwood Hotels & Resorts, the American owner of the Sheraton and W brands. The two companies are unrelated, although both were founded by Barry Sternlicht, Starwood Capital’s boss. Cr?dit Agricole has increased its stake in Whitbread from 10.7 per cent to 11.3 per cent.
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Shares in BSkyB,the satellite broadcaster in which News Corporation, parent company of The Times, has a 39.1 per cent stake, soared to their highest since March 2004 after an upbeat trading statement. The shares rose more than 4 per cent, up 28p to 700p, on the back of evidence that it was eating into the available market for high-speed internet access subscribers.
Bridgewell Securities said that BSkyB’s trading was bad news for its rivals, including Carphone Warehouse. Carphone’s shares added 1½p to 335½, however, on sentiment that the market for internet providers has plenty of room to expand.
Shares in WM Morrison, Britain’s fourth-largest supermarket group, added 8½p to 313¾p. Traders are still waiting for news of a multibillion-pound deal on its property portfolio. ABN Amro upgraded its recommendation from “hold” to “buy” and notched up its target price from 340p to 363p. Successive interest-rate rises may be putting the squeeze on shoppers, but that should play into the hands of Morrison’s, which makes low-priced goods its hallmark.
DIY retailers will feel the pain from any cutback on household spending as so-called nonessential items are the first to fall by the wayside. Shares in Home Retail Group,owner of Home-base and Argos, fell 10¾p to 438¾p, the biggest faller among first-line stocks.
The FTSE 100 closed 15.8 points down at 6,615.1, pulled lower by down-grades to BP and Royal Dutch Shell by brokers at Goldman Sachs. Goldman added Shell to its “conviction sell” list with a £19 target. Royal Dutch B shares fell 29p to £21.07. BP, down 6½p to 605p, moved from “buy” to “neutral”.
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Shire, Britain’s third-largest drugs group, shed 24p to £11.97 after Matt Emmens, its chief executive, told reporters that the company “could still do a very large deal”. Mark Clare, chief executive of Barratt Developments,said that he expects any down-turn in the housing market to drive more consolidation among housebuilders. Barratt’s forward sales stood at £1.41 billion at its June 30 year end, up from £1.23 billion last year. Barratt fell 4p to 969p.
— New York: Shares on Wall Street bounced back from falls the day before, boosted by takeover activity. At the close the Dow Jones industrial average was up 76.20 points at 13,577.90.