Predator talk boosts media morsel Aegis

NEWS that French media giant Publicis is to acquire BCom3, the USJapanese conglomerate, in a £3bn all-share deal that will create the world's fourth-largest advertising company had punters searching for the next likeliest takeover candidate in the sector.

They didn't have to look far. Aegis, one of the last remaining independent media agencies and a perennial bid favourite, raced 7 1/2p ahead to 117 1/2p on turnover of 12m-plus shares.

Omnicom of the US has long been rumoured to be stalking Aegis, which reports annual results next week. Broker Merrill Lynch downgraded its full-year pre-tax profit forecast to £47m from £54.5m following January's cautious trading update. Aegis said trading conditions remain subdued and it warned that write-offs in its Argentine operations could reach £10m.

Any bidder would dearly love to get its hands on Carat, Aegis's media buying arm. It is a strong player in Europe and would make a perfect fit for one of the majors wanting to expand there. WPP paid 38 times historic earnings for Tempus. On the same basis, Aegis would go out at 186p. Analysts reckon a more realistic take-out price would be 140p.

Troubled agency Cordiant, rumoured to have had preliminary bid talks with Publicis last year, advanced 4p to 79 1/2p.

The FTSE 100 breached 5300 in celebration of Wall Street's overnight gain, but closed below the best on profit-taking. It touched 5317.6 before closing 36.6 points higher at 5282.1. Sterling hardened to $1.4263 and the euro to 61.67 following the Monetary Policy Committee's expected decision to leave UK interest rates unchanged at 4%.

Federal Reserve chairman Alan Greenspan annoyed the bears by stating that America's first recession in a decade appears to be over. Helping the bullish cause, too, was further evidence that the US economic recovery is gathering pace. Non-farm labour productivity increased at a revised 5.2% annual rate in the fourth quarter, from an initial estimate of 3.5%. Jobless claims in the US dipped 5,000 to 376,000 in the week ended 3 March, compared with a forecast 2,000 increase.

Imperial Tobacco lit up the Footsie with a gain of 81p at 992p. The market gave the big thumbs up to its proposed £1bn rights issue to help finance the £3.54bn purchase of German-based Reemtsma, the world's fourth-largest cigarette maker.

Demerged from BT, mobile phone group mmO2 buzzed 3 3/4p to 71 3/4p on the perception that it could benefit from tensions in the German telecoms market. France Telecom and its estranged German partner MobilCom are locked in a wrangle over disputed business plans for next-generation mobile phone networks and complex share dealings.

Financial Times publisher Pearson, whose shares have been in big demand since Monday's figures, rose 37p more to 885p. Shareholder Telefonica yesterday denied it was about to sell its 5% holding of 39m shares. It announced last May that it was looking to unload it.

Healthcare company Provalis firmed 1p to 13 3/4p following details of a £10m placing and open offer at 11 1/4p.

Tesco, the UK's number one supermarket, was off the menu following Carrefour's disappointing growth forecast for 2002. It closed 9p down at 241p on a meaty turnover of 57m. Annual results are due early next month. Rival J Sainsbury fell 11 1/2p to 404 1/2p and Safeway 6 1/2p to 308 1/2p.

Orchestream, which provides telecoms operators with internet management software, firmed 1 1/4p to 7 3/4p. Directors have been buyers as has Legg Mason Investors Assets Managers, which recently bought a further 1.25m shares, increasing its shareholding to 3.9%.

Aim-listed Fairplace Consulting rose 5p to 127 1/2p after signing an agreement with Workthing.com, a UK online recruitment solutions provider. It will provide career advisory services by telephone and internet to users of the website.