Market Report: Break-up speculation drives Hanson higher

It used to be known as "the company from over here that's doing rather well over there", but the glory days for Hanson are in the dim and distant past.

As a pioneering industrial conglomerate, it epitomised the corporate mentality of the 1980s. Until conglomerates went out of fashion, forcing Hanson to spin-off its chemicals, tobacco and coal assets. Yet, almost without anyone noticing, its shares have performed miracles in the past three years, increasing 185 per cent since early 2003. Not bad for a company with only two out of 16 analysts covering its stock prepared to say "buy".

Hanson shares were up again yesterday, closing 24p higher at 741p, as rumours swept the market that the company is about to break itself up for a second time, with the American arm of the business going its own way.

The company is doing rather well in the US, with 48 per cent of its profits coming from across the pond. Its February results showed a 47 per cent increase in full-year pre-tax profits, but the UK and Australian divisionslag behind the US, where its aggregates and heavy building materials businesses are the largest players in a highly fragmented market.

The bid speculation bandwagon shows no sign of slowing down, and despite ongoing reports of doom and gloom on the high street, much of the talk centres on retailers.

After the electrical goods retailer Kesa, the owner of the Comet stores, confirmed a consortium of unnamed private-equity bidders had offered 325p a share for the business the rest of the retail sector shrugged off its woes and rallied strongly. DSG International, which operates the Dixons electrical retail chain, gained 10.25p at 187.25p, while Kingfisher, the owner of home improvement chains in the UK and France and itself the subject of takeover speculation, rallied 14.25p to 253.25p. Kesa was the best performer in the FTSE 350 index, adding 32p, or 10.9 per cent, to 325p, having traded 71.75p better earlier in the session.

The Body Shop was also in focus as dealers speculated about an offer on the cards for the ethical beauty products group. The French cosmetics giant L'Oréal recently confirmed The Body shop is one of several possible acquisition targets it has looked at. Shares in The Body Shop rallied strongly late in the day, adding 17p to 267p.

Marks & Spencer was also well bid as speculation about a leveraged buyout increased. The stories have done the rounds over the past few weeks, and it is a stock no trader wants to be short of. M&S shares added 16p at 570p. The only real blot on the retail landscape was French Connection, as full-year profits fell 53 per cent to £15.7m, even lower than previously indicated forecasts.

The ailing fashion retailer said Stephen Marks, the executive chairman and founder, remains committed to the company in which he retains a 42 per cent stake. But thiswas not enough to entice traders, and French Connection shares dropped 3p to 249.75p. Overall, it was an off day for the FTSE 100, despite a mixed bag of sellers and no stock losing more than 2 per cent of its value. Vodafone was the main reason for the index's slide, after the mobile telecoms giantgave up some of its recent gains on bid speculation. It closed a penny lower at 128.75p.

Dealers were short on ideas and direction as the market spent most of the session in single-digit movements both ways, but even a positive opening on Wall Street failed to push London higher, and the index of leading shares closed down 2.2 at 5950.6.

Inmarsat has performed strongly since its market debut in May, but the satellite network operator closed 11.75p lower at 375p.

The investment banks Lehman Brothers and Morgan Stanley placed 74.1 million shares on behalf of the private-equity groups Apax Partners and Permira, as well as Comsat Investments, a subsidiary of the US defence contractor Lockheed Martin and the Norwegian telecoms group Telenor. All sold out the majority of their remaining positions in the stock.

The minnow Scotty Group added 0.35p, or 21 per cent, to 2.02p, as the video communications specialist confirmed a £4.6m order for its helicopter satellite equipment from Eurocopter Deutschland.

The German military is expected to build up the order, whichcould be worth £7.5m to Scotty.

Strong interim results from the home care provider for the elderly Careforce sent its shares 15p higher to 134p, as it reported first-half profits of £200,000, up from a loss of £600,000.

Finally, GW Pharmaceuticals, the UK's only legally sanctioned grower of marijuana, gained 5.5p to 125.5p after speculation in the market about a partnership with a US drug company.