Market Report: Williams gains strength on talk of new Tyco offer

WILL IT be third time lucky for Williams?

Shares in the security products group clocked up a near 6 per cent gain and finished 20p higher at 373p amid talk that its US rival Tyco could approach it for a third time.

The stock rose from the opening bell as dealers started muttering that a large US broker, believed to be Morgan Stanley, was buying stock in the market on behalf of Tyco.

A large number of trades at the price of 378p seemed to confirm that someone was accumulating shares in Williams.

Some dealers said that Tyco might want a stake in Williams before putting another merger proposal to its board. The two companies have already talked twice over the past two years and never managed to agree a price. The market is now convinced that Tyco could come up with an offer of around 475p per share - below Williams' desired level of 500p but above Tyco's last offer of 450p - which could be a tempting proposition for both management and shareholders.

The possibility of management buyout was also mooted although the conglomerate Tomkins, down 2p to 289.5p, is a much hotter tip to go private.

The rest of the index had a day of two halves. The FTSE 100 started in a subdued mood and ended the session with a rip-roaring rally at the instigation of Wall Street. The blue-chip index 91.8 higher at 6,245.1. Most of the credit for the rise went to a benign set of US inflation data which pushed the Dow to a three-figure rally before the London close.

The second liners were never really able to rally with the same conviction. The FTSE 250 ended 27 up at 5,987.1 and the Small Cap finished 7 better at 2,726.2.

Volume was thin as befits a summer Friday but a few interesting stories livened up the proceedings. Investors returned to the cleaning giant Rentokil, up 9.75p to 245.5p amid rumours that next week's interims could bring a share buyback. More imaginative dealers said the company was lining up a mega-acquisition to boost earnings or even that Danish shareholders Sophus Berendsen and Ratin could sell some of their 35 per cent stake.

Dealers were laughing all the way to the banks as the market rebound combined with a review by broker HSBC and persistent takeover talk to trigger a sector rally.

HSBC support helped NatWest, 61p higher to 1213p and Royal Bank of Scotland, up 63p to 1262p. Those keener on corporate action than analysts' research highlighted on Barclays - 75p better to 1854p amid revived whispers of a tie-up with RBoS. The Woolwich was also excited by speculative buying and rose 12.75p to342.75p. Lloyds TSB, up 23.5p to 876p and Bank of Ireland, up 0.12 euros to 8.92 euros, were the mooted partners. Bank of Scotland, 43.5p higher to 775p was also in the takeover frame.

Building materials stocks were in constructive mood. Scottish & Southern Energy surged 32p higher to 572p as brokers tipped it as one of the least affected by Thursday's price cuts.

The bears tore the publisher Emap to shreds after poor circulation figures. Sluggish growth in sales of its laddish magazine FHM left the shares 59p lower to a limp 1072p.

The profit takers dug a hole for mining groups although consolidation talk is still there. Rumoured bid target Billiton shed 7.75p to 295p, while mooted predator Rio Tinto lost 20p to 1264.5p. However, the other potential acquirer Anglo American climbed 14p to 3785p.

Bids, real and rumoured swept the undercard. Whisky maker Highland Distillers knocked back a 76.5p rise to a record 370.5p after confirming the arrival of a bid. A management buyout or a strike by French giant Pernod are the two hot tips. New Allied Domecq, down 2p to 555p, is a more remote possibility.

Storehouse bagged 7p to 118.5p after reports of a joint strike by Philip Green and the Barclay brothers. Dealers are betting on a bid at around 175p per share and speculate that the Green/Barclay combo could also go for Sainsbury, up 11.25p to 390p.

Engineer BICC firmed 3.5p to 94.5p after a huge line of stock was placed. Rumours of a bid were also heard. Fears of a fine by the Italian competitions watchdog knocked Coke bottler Coca-Cola Beverages 6.5p lower to 112p, while a 37 per cent plunge in interim profits sent United Assurance 19p lower to 394p.

Among the minnows, continuing talk of a US bid and major contracts pumped heart stent-maker Biocompatibles 18p higher to 146.5p. Whispers of a major contract win also helped teacher trainer HW to a 10p rise to 87.5p, while trendy clothes chain French Connection moved 7.5p higher to a record 625p on talk of good sales. Stratagem tried to escape investors' wrath by issuing a profit warning 30 minutes before the close but the sellers still got their orders in and the engineer finished 12.5p down to a five-year low of 52.5p.

SEAQ VOLUME: 1.08bn

SEAQ TRADES: 71,606

IS RONSON about to light up? A growing band of punters believe that, after a chequered past, the cigarette lighter maker could be about to turn the corner. Forthcoming results should show some improvement but insiders say the best is yet to come. Ronson has just launched a range of new lighters, which are rumoured to have the potential to fire sales. The shares have been stuck at 1.325p for some time, well below their high of over 19p four years ago.

TECHNO-INVESTORS are raving about the computer game maker SCI Entertainment. The AIM-listed group, up 13.5p to a yearly peak of 100p, is rumoured to be looking at a full listing after forthcoming results, which should show a return to the black. There are also whispers of a deal to license SCI's best-selling Carmageddon driving game to Sega's Dreamcast console, and talk of a new game based on the film The Italian Job.