Market report: Huge Unichem trade gives dealers a merger headache

THE CHEMISTS' group Alliance Unichem was nursing a bit of a hangover yesterday as a large broker attempted to sell a chunk of shares.

The stock closed flat at 425.5p, but the huge volume of over 10 million shares traded was grist to the City's rumour mill. Dealers said that one of the big market makers, rumoured to be Credit Suisse First Boston, was auctioning 12 million shares - about 4 per cent of Alliance - on behalf of an institutional client. CSFB apparently succeeded in selling about 9 million shares at 425.5p, but market watchers said that there could be more to come this morning.

The large line of stock on offer sparked rumours over the identity of the seller. The drugs retailer, chaired by the cigar-smoking beer-swilling former chancellor Kenneth Clarke - has only three shareholders with that amount of stock: deputy chairman Stefano Pessina, who owns about 36 per cent, and fund managers PDFM and Scottish Widows, with about 4 per cent each.

According to those in the know, Mr Pessina does not want to sell at these levels because Alliance's price has slumped from a high of 602.5p a year ago. However, the two institutions could have decided that, after months of suffering, it is time to get out of the owner of the Moss the Chemist chain. Pressed, most dealers plumped for Scottish Widows as the most likely seller.

The rumours of the big Alliance placing were reinforced by whispers of a large programme trade being pushed through the market by an institution willing to tidy up its books before the year end. The chunky trade was said to contain many sell orders for the beleaguered retail and leisure stocks and buy orders for the in-form techies.

The programme, and a buoyant Nasdaq, were responsible for a surge in computer group Sema, up 75.5p to a record 1,155p, Sage, 208p higher to a best-ever 4,786p and midcappers Computacenter, 85p higher to 965p, and Pace Micro, 40p better at 495p. Software giant Misys soared 86p to 786p as analysts came out of pre-results meetings with a smile on their faces.

The hi-tech rally left the techMark 100 index a huge 137 points higher at a record 3,214.89. Unfortunately, the techies' excitement did not spill over to other blue chips. The FTSE 100 ended just 7.7 points at to 6,653.7 as an uncertain start on Wall Street curtailed some of the earlier gains. The Dow opened on a shaky note amid nervousness ahead of today's all-important employment data.

Falling blue chips outnumbered risers, but a few chosen stocks shone. BT soared 66.5p to 1,392p after jumping on the Internet bandwagon with a deal with Freeserve, up 82.5p to 370.75p.

Drug stocks were thrown in the spotlight by news that Jan Leschly, chief executive of SmithKline Beecham, 39p higher to 881p, will retire in April. A merger with Glaxo Wellcome, 33p to 1,898p, is now odds-on. AstraZeneca shed 118p to 2,727p as the market took a dim view of its agrochemicals joint venture with Novartis and of Monday's product presentation.

Scottish & Southern Energy sparked 31p higher to 505p on a softer-than- expected regulatory review and rumours of an imminent share buyback. However, British Energy dropped 7.5p to 358.5p despite starting its own buyback.

The steel giant Corus strengthened 10p to 134.25p after the end of an industrial dispute in Holland. Aircraft engine-maker Rolls-Royce powered 15.5p ahead to 210p on whispers of a large contract win, while British Aerospace flew 13.75p higher to 379.5p on hopes of stronger links with its European partners.

Media group Carlton beamed 25.5p higher to 565p on rumours of a counterbid, even though Pearson, 37p higher to 1,517p, denied any interest.

Kingfisher, 27.5p better at 607p on talk of European deals, was a rare riser among retailers. Mail-order group GUS delivered a shock profits warning and plummeted 84.5p to 340.5p - the lowest since 1993. Midcapper Debenhams lost 15.25p to a 173.75p nadir on growing talk of poor trading, while a profit warning sent bookseller Ottakar's 38p lower to a worst- ever 66p. Nerves ahead of next week's results sliced 37p off catering group Compass, at 712p.

The FTSE 250 put together a rip-roaring rally, finishing 43.6 higher at an all-time high of 6,243.6. The hi-tech group AEA Technology soared 50p to 437.5p on rumours that a predator was hovering. Whispers of a deal for AEA's clean diesel exhausts and a bullish note from Cazenove were heard. Inventions group BTG jumped 75p to a best-ever 665p on talk of a deal for a patent.

Vague bid rumours pushed chemical group Elementis 8.5p higher to 89p and financial company Gerrard 33.5p up to a record 515p. Renewed whispers of a stake sale from the family sent Thomson Travel 6p higher to 106p. Train maintenance group Jarvis was derailed by a slump in interim profits and plummeted 32.75p to 270p.

The Small Cap was also in record-breaking form, soaring 22.9 to a best- ever 2892.3.

Two newcomers did well. Football website 365 kicked off with a 99.5p rise to 259.5p. Discount retailer Peacock bucked the sector trend with a 30p rise to 193p. However, accident management specialist Alpha Accident debuted on AIM with a 1.5p fall to 48.5p.

The rest of the tiddlers' universe was dominated by rumours of Internet reverse takeovers into cash shells. Property firm Bolton International rocketed 325 per cent, or 6.5p, higher to 8.5p after two investment vehicles bought 29 per cent. Building materials minnow SWP rose 1p to 3p in huge turnover on similar Web-based rumours.

AIM-listed Media Content firmed 2.75p to a record 8.5p after admitting it wants to buy a stake in an online venture. Rival Medi@Invest lost 1.75p to 14p despite whispers that a deal to provide a children's portal is near.

Electronic group Xaar buzzed 15p higher to a record 262.5p on whispers of a deal, while computer games maker Digital Animations returned with a 10p fall to 44.5p. New deals are rumoured.

SEAQ VOLUME: 2.57bn

SEAQ TRADES: 111,155

GILTS INDEX: 106.12 -0.49

f.guerrera@independent.co.uk

JWE TELECOM, the telecom tiddler, is believed to be working on a major deal for its wireless communications services. In October, it announced a tie-up with Dolphin Telecommunications to offer its customers fast data transmission and digital phone lines. According to the rumours, the new deal could be similar or even better. An announcement could help JWE's shares, which have slumped from January's 220p to 94p yesterday.

STAND BY for a momentous deal at Jordec, up 9p to a yearly peak of 47p. The AIM-listed group is trying to reduce its dependence on nuclear decomissioning to become a wider support services group. If rumours are to be believed the company is lining up a deal which could transform it. Followers of the stock hope the the mooted corporate action will push Jordec's shares beyond the 85p they touched back in 1995.