Market report: Friday close

IT IS the first day at the office next week for Doug Flynn, the new chief executive of building services and hygiene group

He faces an uphill struggle following a difficult few years for Rentokil shareholders that have culminated in a boardroom coup and a severe underperformance by the shares.

But brokers such as Credit Suisse First Boston believe that is set to change with the arrival of Flynn. As a result, it has begun coverage of the shares with an outperform rating and 185p price target.

In a note to clients, it says: 'This is the time to lead the turnaround. Run with not too far-fetched assumptions about capital expenditure and cost-cutting, and the leverage buyout case can just about be made out.'

The broker observes that no matter how poor the trading outlook, the shares always appear to find support around 150p, which is just as well.

There have been any number of reasons to sell Rentokil in recent times. Last year former chief executive Sir Clive Thompson was sacked as chairman, much to the surprise of the City. He was the man who turned Rentokil from an outfit worth £200m into a multi-billion-pound company.

His departure was followed a short while later by that of chief executive James Wilde. Since then, there has been much talk of a private-equitybacked bid, which has helped lift the shares from a low of 136p since June last year. Earlier this week the price was helped by news of the bid for its big Danish rival ISS. Today the shares rose 5¼p to 167¼p.

Shares in debt-laden MyTravel shaded 0.2p to 5.67p as more than 2bn changed hands. Broker Credit Suisse First Boston conducted a bookbuilding exercise in 1.3bn shares, worth an estimated £65m. It is thought the seller was Royal Bank of Scotland.

A lump of 1.13bn shares went through at 5.72p, closely followed by a parcel of 797.3m. The group's financial restructuring was completed late last year and a share consolidation is soon to be undertaken. It was best foot forward for the rest of the London market as the second quarter got under way. A smaller-than-expected rise in US unemployment numbers helped underpin the FTSE 100 index closed 19.6 points higher at 4914, having been brought down from a session high of nearly 4940 by a reverse on Wall St.

Oil shares were marked higher on the assertion by US securities house Goldman Sachs that the oil price will soon spike at more than $100 a barrel. BP put on 3½p to 552p while Shell added ½p at 475½p.

Telecoms group Redstone returned from suspension down 0.13p at 7.13p after posting listing details of its proposed reverse takeover of Xpert Group for £25.5m.

Renold 10p to 59p after warning that its full-year results are likely to be below expectations, mainly as a result of lower sales in its automotive systems unit.

Takeover target Somerfield rose 3¾p to 213½p after the supermarkets chain said it will begin talking to suitors. These include property magnate Robert Tchenguiz, backed by Apax Partners and Barclays Capital, and private property company London & Regional.

Tchenguiz is reckoned to be offering 205p a share, while L&R is stumping up 190p. Icelandic retailer Baugur may also want to come back with another offer. Retail analyst Philip Dorgan at Panmure Gordon says Somerfield is doing the sensible thing.