Market Report: Telewest beams higher on rumours of bid by US giant

IS TELEWEST Communications in the sight of an overseas predator? The cable TV group beamed 11.75p higher to 272.75p in a dull market amid whispers that an American giant is having a sniff.

Switched-on dealers said Telewest, where the mighty Microsoft has a 29.7 per cent stake, could be vulnerable to a strike from a Yankee giant willing to get its hands on Britain's burgeoning cable market.

Since failing to acquire the residential business of rival Cable & Wireless Communications, 10p lower to 630p, in the summer, Telewest shares have been on the blink, sliding from a high of 314.5p.

At these levels, a cash-rich overseas predator would have little trouble in tuning on to the Telewest shareholders with an offer. Microsoft, for one, will certainly be in favour of a strike. At the time of the share purchase, Bill Gates' outfit said that it wanted to see more consolidation in the global cable industry. Some excitable traders said Mr Gates could have a go at Telewest himself, but cooler heads said a bid from a large US phone and cable company was more likely.

An offer from NTL, the conqueror of CWC, is possible, even though insiders believe that the US group wants to swallow CWC before biting into Telewest. However, if NTL waits any longer, they could be pipped to the post by a rival.

Telewest vied for dealers' attention with Granada, 23.5p higher at 509.5p, as talk of an acquisition grew louder and louder. The market is convinced that chairman Gerry Robinson wants to buy a media company as a prelude to the break-up of Granada's leisure and TV interests.

Scottish Media Group, flat at 885p, has long been mooted as a target, but some dealers believe that Mr Robinson could go big and have a pop at arch-rival Carlton, up 7.5p to 448p.

The overall market was as interesting as a 2am repeat of Granada's Coronation Street. The FTSE 100 ended 32 lower at 6,252.00, hit by weakness in its two biggest stocks and strong fears of a rate hike tomorrow. A firm opening in the Dow, after a speech by Alan Greenspan proved a non-event, did not help London.

The main drag on the blue chips came from BP Amoco and Vodafone Airtouch, which wiped 34 points off the index. BP Amoco felt the chill of the Alaska governor's call for a regulatory probe into its Arco acquisition. Vodafone dialled a 10.75p loss to 289.25p amid fears that its US rival MCI Worldcom might eat into its UK market share by bidding for one of the new generation mobile licences.

Other telecom stocks remained buoyant. Energis, 90p higher to a new record of 2100p, and Colt, 86p better to a best-ever 1,933p, were still supported by whispers of foreign bids. Energis shareholder National Grid rose 16p to 467p. Telecom services group GEC soared 34.5p to 699.5p amid hopes that it will soon enter the highly-rated IT sector. Talk of bolt-on buys and a Cazenove "buy" note also helped.

NatWest jumped 27p to 1,398p on whispers that Royal Bank of Scotland, 21p lower to 1,391p, could soon trump the offer from Bank of Scotland, 11.5p better at 764p, with a 1,600p-plus bid.

Armoured vehicle maker GKN shot 36p better to 1,021.5p on speculation of a major contract win, while mining giant Anglo American dug up a 100p rise to 3,350p after telling analysts that it will not go hostile on Tarmac, 15p up to 503p.

On-going bid talk inflated gas group Centrica, 2.5p better at 175.75p, but Corus Group, the old British Steel, was hammered 3,256p lower to 111.25p by a 12m share sale by a instititutional shareholder. Struggling Marks & Spencer lost 5p to 278p after the interims debacle, while cleaning group Rentokil mopped up a 2.75p rise to 203.75p on talk of a deal.

Drug stocks were undone by profit-taking, with AstraZeneca, 68p down to 2,707p, and Glaxo Wellcome, 38p lower to 1,763p, the worst hit.

The mid cap outperformed its big brother, rising 29.1 to 5,673 thanks to a rip-roaring rally in housebuilders and hi-tech stocks. The brick and mortar merchants were supported by another huge rise in house prices. Taylow Woodrow, 6p firmer at 149p, and Barratt, 10p up to 253.5p, led the way.

Mini-computer maker Psion starred among the techies, surging 135p to 1,700p on whispers of new deals and a stock shortage. ARM Holdings soared 94p to a new record of 1,891p after a microchip deal with Texas Instruments.

Its market value is bigger than blue chips such as British Airways, 4.25p down to 305.5p. Israeli hardware group BATM surged 300p to a 3,682.5p peak after an upbeat presentation at Lehman Brothers.

Man ED&F rose 17p to 377p on talk of a break-up of its sugar and asset management operations and talk of forthcoming strong results, while good figures from GWR, 16p better at 462.5p, helped rival Capital Radio up 54p to a 1,065p high. Punters' buying and talk of positive numbers helped Airtours up 9p to 334p.

Rehashed bid rumours sent glassmaker Pilkington 5.5p higher to 96p, and supermarket chain Safeway 9.5p up to 198.5p. However, building materials group RMC crumbled 21p lower to 851p on fears of a cash-sapping bid for rival Rugby, 4p up to 118p. Property group Peel Holdings developed a 12.5p loss to 550p after delaying a pounds 600m bond issue and share buyback, while bus group Stagecoach travelled 6.5p lower to 163.75p.

The Small Cap was in good form, rising 4 to 2,643.2. The Falkland oil drillers had a field day on whispers that Desire Petroleum, up 17p to 43.5p, is close to a big find in the islands.

Westmount, 8p higher to 32.5p, and Greenwich Resources, 2p higher to 8.5p, benefitted from their stakes in Desire. Software minnow AFA Systems jumped 14.5p to 167.5p on talk of an Internet tie-up, while whispers of forthcoming deals pushed netvest.com 12.5p higher to 57p.

SEAQ VOLUME: 1.19BN

SEAQ TRADES: 86,372

GILTS INDEX: 106,49 +1.00

f.guerrera@independent.co.uk

ENTREPRENEUR Stephen Dean is a busy man. His AIM-listed Internet investment vehicle, VoyagerIT.Com - up 1.5p to a best-ever 8.5p - is said to be looking at a couple of privately owned Net businesses. A deal, worth over pounds 10m, could be signed by the end of the month.

Mr Dean's housebuilder Artisan, up 0.75p to a record 9.25p, is also looking good. With its exposure to the booming Cambridge-area, it could be a prized acquisition for a rival.

EXPECT GOOD news from Drew Scientific, 1.5p firmer at 87.5p. The medical equipment minnow is believed to be close to a major overseas distribution agreement for its unique homocysteine testing system. The product is a unique kit to test patients for Alzheimer and cardiovascular disease, which Drew is preparing to license to a large pharmaceutical or medical products company. Other deals are expected in the short term.