McCarthy leaves door open to bids

IT'S never over until the fat lady sings. Founder and non-executive chairman John McCarthy may have pulled out of plans to buy

Having crashed 63p late on Friday after 13% shareholder McCarthy's decision to walk away, the shares collapsed a further 15 1/2p in early trading. But they bounced back amid speculation that a leading UK housebuilder had approached the board about tabling a possible share exchange offer. The close was 9p higher at 466p.

Persimmon (11p better at 486 1/2p), the UK's second-biggest housebuilder, was again touted as a bidder.

Chief executive John White has got gearing down from 100% to only 30%-plus and is ready to do another deal. Persimmon's last was its spectacular £610m purchase of Beazer in 2001. Apparently, White's ambition is for Persimmon to become the first housebuilder in the Footsie.

He could bid £624m, or 600p a share, for McCarthy, which would lift Persimmon's market value to almost £2bn. Its place in the elite would be guaranteed.

Analysts would approve because McCarthy is a cash-generative niche builder that could fit well in the portfolio of several leading housebuilders.

Wall Street's early morning spurt of 158 points after better-than-expected second-quarter figures from Citigroup and Bank of America, plus a surprise £1bn bid by internet group Yahoo! for search engine Overture, gave London a lift. The Footsie jumped 69.5 to 4127.6.

Sterling eased to $1.6225, while the euro traded at 69.5p and $1.1283. Information group Reuters advanced 13 3/4p to 221p on demand ahead of next Tuesday's interim figures.

Broker Charles Stanley reiterated its accumulate rating, saying the turn in equity markets has raised hopes that the long downswing in customer profitability is over.

Fashion group Next rose 45 1/2p to 1108 1/2p after Smith Barney upgraded to outperform and raised its target price from 1100p to 1250p. Marks & Spencer gained 12 1/2p to 339p in anticipation of tomorrow's agm.

After UBS moved from neutral to buy and raised its target price from 105p to 170p, engineer Bodycote put on 13p to 147p.

Aim-listed North East bars and nightclubs operator Ultimate Leisure boogied 7 1/2p higher to 267 1/2p. Business is said to be booming in its Newcastle heartland and industry rumours persist that chief executive Allan Rankin is ready for the big push down south.

Word is he has Urbium, the quoted Tiger Tiger bars group, in his sights. Urbium rose 20p to 335p on hopes of a bid and ahead of a trading statement.

More than 4m Griffin Mining were traded and the close was 3p better at 15 1/2p.

Buyers responded to news that Kolar goldfields company Indian Minerals Corporation plans to list its shares on Aim through an entitlement issue offered solely to Griffin shareholders.

Oxford Biomedica rose 4p to 21p after encouraging results from trials relating to a new delivery method of its cancer drug, TroVax.

Belgravium Technologies lost 3 1/4p to 11 1/4p after warning that full-year turnover and profits will be significantly below expectations.

Placed on Aim at 7p, African Diamonds edged up to 8 1/4p in thin trading.

Specialist magazine publisher Wilmington gained 13p to 107 1/2p after an upbeat trading statement. Results for the year to June will exceed market expectations.

Pilat Media advanced 4 1/2p to 34p after signing contracts to supply three new clients with TV channel management software.

Lombard Medical firmed 1 1/4p to 27/8p. Advanced Medical Technologies now either owns or has received valid acceptances of its offer to acquire 86.8%.

HAYS rose 3 1/2p to 105p after dealers greeted the sale of its Information Management Services to Iron Mountain for £200m, some £35m more than analysts were expecting. The disposal is the first of three since Hays flagged in March that it was changing into a personnel business. Surplus cash will be returned to investors via a special dividend or share buyback.