European Motor revs up on bid talk

WORD FROM Arthur Daley's forecourt is that another quoted car dealer is about to lose its independence. With the corporate ink on Pendragon's agreed 600p-per-share cash offer for CD Bramall barely dry, rumours suggest that

Inchcape (4p cheaper at 1414p), the world's largest independent distributor of Toyotas, said in December that it was on the prowl to snap up smaller rivals to expand its UK operations. European Motor would be a perfect fit.

Run by Richard Palmer, the man who introduced Lada cars into this country, it operates 39 car dealerships in the UK and represents most major luxury vehicle manufacturers including BMW, Audi and Jaguar. Dealers expected consolidation in the sector to gather pace after EU rules that restricted the ability of car manufacturers to dismiss dealers came into force in October.

Veteran investor Jack Petchey has kept a 5.2% stake in European Motor. He made a big profit in June 2001 when he sold 6.6m EM shares at 86p after paying an average 42 1/2p a share. He could soon trouser another packet. Other car dealers revved higher on expectations of four-star takeover action.

Lookers, which has more than 90 dealerships and an annual turnover of over £790m, accelerated 9p to 305p. Caffyns purred 32 1/2p higher to 702 1/2p in a thin market. GAM Exempt-UK Opportunities Fund has acquired a 2.9% stake.

The Footsie remained stuck in the slow lane. The expected 0.25% rise in UK interest rates to 4% prompted a rally, which soon petered out. The close was 14.1 points lower at 4384.4 with overall turnover looking healthy at 4.4bn.

Fund managers were cautious ahead of today's crucial US non-farm payroll (employment) numbers. Consensus forecasts are for a rise of 175,000 in January. The data will provide clues on the prospect for interest rates in America.

Wall Street retrieved an initial 16-point deficit to trade 22 higher. Sterling edged up to $1.8393, while the euro firmed to 68.5p and $1.2604.

Impressive fourth-quarter figures from US peer Starwood helped Inter-Continental Hotels rally 16 1/2p to 550p. Continuing takeover chatter left brewer Scottish & Newcastle up 7 1/4p more at a high of 421 1/2p.

Boosted by news of rival Universal's declining market share and an Investec recommendation, music giant EMI touched 243p before closing 9 3/4p better at 231 1/4p.

Manchester United scored a gain of 4 1/2p to 265 1/2p on news that top fund manager Legal & General has bought 3.11%, or 8.15m shares. Many dealers still believe the escalating row between Sir Alex Ferguson and Irish multimillionaires John Magnier and JP McManus could lead to an eventual full takeover bid.

Business data provider The Market Age soared 12 1/2p to 20p following a bullish agm. Shareholders heard that revenues would rise by more than 100% on last year's full results after its Pronet Analytics unit won an important contract.

Speculative buying lifted Phil Edmond's Central African Mining and Exploration Company 2 7/8p to 12 3/4p. Investors who subscribed for stock at 4p in December's placing are sitting pretty.

Fortune Oil advanced 3/8p to 5 1/4p following the sale of its stake in the BlueSky airport refuelling business for a premium price of £31.8m. Broker Oriel Securities says the excellent price attained will help accelerate Fortune's programme of investment in China's energy sector.

An Evolution buy in the wake of the figures helped Danka Business Systems rise 3 1/4p to 54 1/2p.

With management banging the drum at institutional meetings, Caffe Nero frothed 3 1/2p higher to 69p. The group is well on course to having 160 sites by the end of the year.

Oxford Biomedica edged up 1/2p to 24 1/4p after signing a licence agreement for its Lentivector gene therapy technology with Merck.

MINING explorer Minco soared 5p to 27p as punters continued to dig in amid growing speculation that it is about to be awarded gold licences in Uzbekistan. Oxus Gold and Newmont Mining are already active in the region. Minco could appoint a new stockbroker soon. Investors who subscribed for stock in December's placing of 12.5m shares have watched the stock treble.