Market Report: Nutricia sell-off could herald Unigate purchase

UNIGATE, the food and transport group, was the centre of attraction as stories circulated that it was on the verge of selling its 33 per cent interest in Nutricia, the quoted Dutch food group.

Any deal, it was suggested, would be worth around pounds 220m and could prompt Unigate into a British acquisition.

HJ Heinz, the US food giant, was, according to rumours in the Amsterdam stock market, interested in buying the Unigate stake and would then mount a bid for full control.

Rumours that Britain's biggest milkman has grown tired of its Nutricia involvement have gone the rounds on a number of occasions in recent years. Under Ross Buckland, the chief executive, the group has been reshaped and its involvement in Nutricia has not appeared to be the perfect blend for the new, streamlined Buckland creation.

An obvious target for Unigate could be Hazlewood Foods, which soured its stock market image this week with a surprisingly weak profits display. Hazlewood shares have since been under pressure but they rose 5p to 125p on the possibility of a strike. Unigate, firm last week on better than expected profits, rose 3p to 366p.

The rest of the stock market ended lower. A bout of futures selling over lunch destroyed early gains and the FT-SE 100 index, at one time up 19 points, ended 18 down at 2,942.4.

But government stocks again managed a firmer display, closing with gains of more than half a point as US bonds looked more settled.

Newspaper shares were devastated by the sharp escalation of the broadsheet price war. The Telegraph crashed 191p to 349p; United Newspapers 83p to 510p and Mirror Group Newspapers 31p to 134p.

Daily Mail & General Trust ordinary tumbled 178p to 1,275p and the 'A' shares 147p to 903p. News International was lowered 9p to 235p and Midland Independent Newspapers lost 9p to 156p. But Metal Bulletin, where Emap has an 18.32 per cent stake, jumped 23p to 423p.

The Telegraph slump enraged institutional shareholders who picked up shares at 587p last month when Hollinger, the holding company of Conrad Black, the Telegraph chairman, cut its shareholding by 9 per cent. The shares were placed by Cazenove, said yesterday to be on the verge of resigning as house broker, and Goldman Sachs, which is thought still to have some of the placing shares on its books.

Grand Metropolitan was a weak market as Smith New Court downgraded. The food and drinks group is due to put its US wares on display for analysts next week. But Smith decided to cut this year's forecast by pounds 10m to pounds 931m and next year's by pounds 50m to pounds 957m. The shares fell 15p to 390p.

An investment presentation failed to inspire Rolls-Royce, down 1p at 181p, and an analysts' visit to Tarmac left the shares 3p lower at 144p.

Imperial Chemical Industries' boardroom shake-up and a continuing response to its Tioxide presentation lifted shares a further 6p to 762p.

Eurotunnel's 67.7 per cent rights take-up should have helped to calm the market but had little impact. The shares were little changed at 278p.

Euro Disney, in the throes of a cash call, tumbled 35p to 153p, reflecting selling in Paris. The rights shares were slashed 80p to 100p.

A quartet of newcomers made mixed debuts. CPL Aromas, sold at 150p, reached 160p, and Bloomsbury Publishing went to 110p from a 105p sale price. The estate agent Chesterton International achieved a tiny 0.5p premium at 100.5p but the video group VCI went to a 9p discount to 141p.

Thorn EMI shaded a few coppers to 1,043p ahead of confirmation that it was selling defence operations to Thomson-CSF of France.

Insurance shares were apprehensive ahead of the pensions White Paper; BAT Industries also had the worry of its US nicotine row, losing 9.5p to 381p.

WH Smith slipped 6p to 471p on rumours that NatWest Securities was preparing a downgrade, and Courts, the furniture group, encountered profit-taking after its figures, falling 24p to 779p.

Hopkinsons, the engineer, held at 48p. Albert E Sharp looks for a continuing recovery, forecasting profits of pounds 1.5m this year and pounds 3.7m in the following year.

And Bell Lawrie White sees considerable growth at Watson & Philip, the convenience stores group, at 374p. It expects profits to improve pounds 1.3m to pounds 13m this year and reach pounds 15.1m next year.

There is talk of a management shake-up at Ocean, the freight and marine services group. Sources close to it say an announcement could be made today. Although staging a sharp profits recovery Ocean made cautious noises about the current year. Profits jumped to pounds 44.1m but the previous year's figures were depressed by a writeoff. The shares rose 1p to 267p.

Macdonald Martin Distilleries, the family-controlled Glenmorangie Scotch whisky group, continues to benefit from a NatWest Securities upgrading from pounds 4.5m to pounds 5.8m for this year. Next year's estimate is pounds 6.8m. The widely held low-voting shares climbed 60p to 560p, a year's high. They have been down to 365p. The tightly held voting shares rose 50p to 775p.

After a bright start shares relapsed and the FT-SE 100 index closed 18 points down at 2,942.4. The FT-SE 250 index lost 24.3 to 3,436.9. Turnover was 540.2 million shares from 21,873 bargains. The account ends on 1 July with settlement on 11 July.

(Graph omitted)