Vikings poised to swallow Geest

FRESH and ready-prepared food group

Broker Citigroup Smith Barney whetted appetites by advising clients to get stuck in on the increased probability of a full-scale takeover by Bakkavor, the Icelandic convenience food company which sits on a threatening 20% stake.

Bakkavor acquired the rump of the shares in a £40m raid in June, paying up to 580p a share. It said then it had no intention of launching a bid, which means it is precluded under Takeover Panel rules from making a move until November 28.

Dealers expect it to waste no time in swallowing Geest once the handcuffs are removed. A cash offer in the region of 650p a share, valuing Geest at £474m, could be tabled in early December. In the meantime, the Icelanders could decide to lock away a few million more shares in their larder until it reaches the 29.9% barrier.

Increasing the chances of an offer is Bakkavor's decision to obtain board authorisation for an increase in its share capital. Citigroup calculates the issue of some 790m Geest shares could boost its war chest by a mouthwatering £130m.

Geest has had a hard time. Turbulence in the food retail sector has squeezed margins and it has been suffering from higher raw-material costs for some of its prepared-food ranges.

Icelandic stakebuilding speculation helped discount airline easyJet fly 11p higher to 170 1/2p.

Meaty turnover of 23m shares - including four tranches of 1m-plus changing hands at an average price of 169p - led everyone to believe that Icelandair had added to its 10.1% shareholding. Last month's low was 118p.

Hoping that there would be a clear winner to the US presidential elections and not a repeat of the 2000 fiasco when it took 36 days to determine who would get the keys to the White House, the Footsie firmed 19.4 points in thin trading to 4693.2.

An optimistic Wall Street advanced 78 points in the early stages, also helped by an easier oil price.

Bears mauled Marks & Spencer amid early rumours that a profit warning is on the way. But the troubled retailer was quick to rubbish a tale that it plans to bring its interim results forward from next Tuesday. Sold down to 356 3/4p, the shares recovered to finish 4 3/4p off at 359 1/4p.

Profit-taking following the recent good gain on takeover hopes left J Sainsbury 5 1/2p easier at 261 3/4p. Members of the Sainsbury family, which sits on 36%, can say what they like. Dealers remain adamant that it is a matter of when, not if, the struggling supermarket gets a mega cash offer it cannot refuse.

Numero uno Tesco, which is moving into the cut-throat mortgage market, eased 1 1/2p to 288 3/4p.

Expectations that governor Mervyn King and his pals at the Bank of England will leave UK interest rates on hold tomorrow helped housebuilders erect good gains.

Wilson Bowden rose 30p to 995p, Taylor Woodrow 6p to 241 1/4p and Bellway 16 1/2p to 701 1/2p.

RAC reversed 26p to 640p after agreeing the transfer of its Leyland truck parts contract to truck maker PACCAR by September 2005.

Broker Oriel Securities downgraded to reduce from hold and shaved its earnings forecasts by 5% because the fall in income after the sale of assets to PACCAR is significant.

Floated on Ofex at 45p, shares of Israeli-based Espro, which develops and markets multilingual audio guiding systems used by tourists in such places as the Tower of London and Edinburgh Castle, closed at 48 1/2p for a useful premium of 3 1/2p.

Pan African Resources, a company prospecting for gold in Ghana and Mozambique, held rock steady at 3 1/4p amid rumours of an imminent announcement.

The appointment of David Mends as finance director helped SP Holdings edge forward 1/4p to 15 3/4p.

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KEEP an eye on Northgate Information Solutions. Shares of the rapidly-expanding IT software and services company jumped 3 1/2p to 65 1/2p after Evolution Securities beat Cazenove to become its joint broker along with the existing Hoare Govett. More than 5m shares were traded as investors took the view that more interesting bolt-on acquisitions could be in the pipeline.