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02/05/2008 - KCom lifted by takeover talk
Hull City Council's sale last year of its 30.5% stake in Kingston Communications at 68p per share to institutional investors still looks a shrewd move.
Geoff Foster, Daily Mail
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Shares of the fixed line telecoms group, now known as KCom, have not traded above that level since last October.
However, over the past few weeks or so, punters have chased the stock up from a low of 41¾p to last night's close of 48¼p, up ¼p, amid revived talk of a possible break up bid in the region of 70p a share.
Speculation suggests leading shareholders are fed up with the current management's performance and would be receptive to a premium offer from either a private equity or quoted industry player.
Chairman Michael Abrahams joined the board over eight years ago and chief executive Malcolm Fallen has been in the post since 2003, during which time the share price has often flattered to deceive.
KCom recently announced the sale of 118 800, its directory enquiries business, for £1.45m to Connectivity. It acquired the business for £1.19m only two years ago.
Analysts were unimpressed and are more concerned about the continuing underperformance and deterioration in trading at its Integration & Managed Services division. Meanwhile, its Telecoms & Internet Services operation continues to trade well, with predictable revenues and strong margins.
Dealers believe there is a good chance that either IMS will be spun off or a bidder will put the company out of its misery. Cable & Wireless, a rumoured bidder, eased 0.3p to 148.9p.
It doesn't happen very often but the Footsie ended the day unchanged at 6087.3. With other European bourses closed for Labour Day holiday, London's premier index retrieved an initial 21-point loss to trade 30.9 points higher before drifting on profit taking.
Further consideration of the Federal Reserve decision to shave US interest rates by a further 25 basis points to 2% helped Wall Street advance 163 points by lunchtime.
Miners featured with Xstrata 86p better at 4032p. Chief executive Mick Davis's comment that he would have no issue with a takeover of the group if it delivered value for shareholders gave the stock a lift.
Worries that the forthcoming long Bank Holiday weekend will be a washout and Joe Public will stay indoors and not fork out on a new radiator for the bathroom or tiles for the kitchen, left B&Q owner Kingfisher 1.8p off at 131p.
Goldman Sachs downgraded to sell from neutral and slashed its target price to 110p from 137p on fears that DIY spending is unlikely to recover in the short-term.
Home Retail, whose Homebase operation saw a 4.1% fall in sales last year, dipped 7¼p to 256¾p.
Property developer Hammerson, which owns the Birmingham Bullring and London's Brent Cross shopping centres, fell 13p to 995p. Its commercial property values declined in the first quarter and the French office market has started to weaken.
Micro Focus International jumped 18¼p to 252p following a solid trading statement and its proposed earnings enhancing acquisition of US-based NetManage, whose software transform core applications into new web-based business solutions.
Craneware, which provides revenue cycle management software to the US healthcare market, gained 9p to 187p. News of the takeover of Accuro healthcare by Med Assets, two of Craneware's principal competitors, had broker KBC Peel Hunt waxing lyrical about Craneware's significant undervaluation.
http://www.thisismoney.co.uk/investing-and-markets/tips-and-tactics/article.html?in_article_id=441078&in_page_id=23&position=moretopstories
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