Budgens ripe for plucking at £225m

THE Irish waltzed into

It pledged then not to launch an outright bid for 12 months unless someone else showed its hand. With the deadline long gone, industry sources suggest Musgrave is now ready to pluck Budgens off the shelf with an agreed £225m offer worth around 130p a share, a 23% premium to Tuesday's closing price of 105 1/2p.

Musgrave paid 89p each for its initial 47.8m shares and so is already looking at a tasty profit on its investment. Its loan stock is convertible by September 2003. If undertaken, it would lift its holding to 43.5%, a level which would automatically trigger a bid.

Musgrave has two non-executives on the Budgens board and the two companies have forged good trading relationships. Musgrave wants to expand its UK presence and swallowing Budgens would be a logical next step.

In buying Budgens, Musgrave would acquire a proven retail operation it knows well with over 200 stores and a strong trading record. It would also secure a dedicated distribution facility and a bakery business. Budgens has carved out its own profitable niche in the food retailing sector. Its market positioning enables it to avoid the worst of the competitive pressures, so it can achieve an above-average sector rate of growth.

The FTSE 100 ended 26.1 points lower at 5135.7. Sterling hardened to $1.4340 but the euro slipped to 61.15p. The Footsie was dragged down by mobile phone giant Vodafone. It lost 6 3/4p to 136 1/4p on reports that chief executive Sir Christopher Gent had told analysts that German subscriber numbers due in March might disappoint.

With worries about group accounting practices escalating by the day, Cable & Wireless collapsed to 228p before closing 9 1/4p off at 240 1/2p. Selling followed reports that it received a £213m boost to revenues and operating profit in 2001 form an accounting method banned in the US since 1999.

Profit-taking after Monday's good gains on director share purchases left BT Group3p off at 254 1/2p. Demerged mobile phone group mm02 held at 71 1/2p after director Paul Myners bought 198,000 at 70p. Telephony reseller Telecom Plus improved 2p to 88 1/2p following chief executive Charles Wigoder's purchase of 25,000 at 85p.

Property group Canary Wharf jumped 16p to 467p following a Merrill Lynch recommendation. With takeover speculation refusing to die down, Land Securities advanced 19 1/2p to 905p. Ahead of today's long-awaited Future, Size and Shape review by chief executive Rod Eddington, British Airways gained 6 3/4p to 203 3/4p.

Drugs giant GlaxoSmithKline firmed 19p to 1740p as Teather & Greenwood advised clients to buy ahead o Thursday's preliminary figures. Analyst Howard Miller expects profits to be in line with expectations.

Shrugging off widespread criticism of the US-style pay package awarded to new chief executive Jim Nicol, engineer Tomkins rose 10 1/4p to 213p.

Safety syringe company Medisys rose 4p to 90p after director David Robbins bought 20,000 at 85 1/2p. Aim-listed construction group Tolent soared 19p to 62p following results and news that it entered 2002 with an order book of £108m.

A WestLB Panmure recommendation lifted biotech company Alizyme 3p to 62p. Equitable Life has sold its entire 3.35% stake.

Dealing resumed in Navan Mining following a rescue rights issue at 20p. Suspended at 18 1/4p, the shares collapsed to 12 3/4p before closing at 14p.

Former dotcom darling InterX, which traded above 3900p in 2000, fell 10 1/4p to 6 1/4p. The internet software developer reported a £153m second-quarter loss and warned of 'significant'' redundancies.