It was another week of record-breaking, 4,000 point-busting highs on the stock market. Despite early jitters over the defections and rejections at the Conservative Party Conference, a strong Wall Street helped keep it up. But is the market too high or correctly valued?
The general view is that pricing is about right, and that we can expect a rash of takeover activity. Right on cue, rumour and speculation drove a number of shares higher. Most significant of these moves was the renewed interest in the exhibitions group Blenheim, which pushed its price temporarily close to 500p.
In a dawn raid, the Dutch publisher VNU spent 70m buying up nearly 15 per cent of Blenheim. VNU denied any current intention of offering a full bid for the company, but that did not prevent bid speculation. The City grapevine, meanwhile, suggested Blenheim has reopened talks with Reed Elsevier. United News & Media is also thought to be interested, a story which helped United’s price. Everyone now seems to be waiting to see which of the predators will come up with the highest offer.
It is thought that United News & Media is also interested in the independent broadcaster HTV, which was in the news last week as reportedly losing out in the bidding for neighbouring franchise holder, the unlisted Westcountry TV. Of several which had bid for Westcountry, HTV put in one of the lowest. This was followed by news the next day that the radio group GWR had bid highest. However, the day after that, GWR was forced to issue a statement saying it would not be going ahead with the bid. The radio group said management would concentrate on integrating its latest purchase, Classic FM.
Acquisition rumours have also helped the price of the UK’s leading cable operator TeleWest. It rose 4p to 125p on rumours that Michael Green’s Carlton Communications was interested in acquiring a ten per cent stake, worth about 110m. It is clear that Carlton is interested in becoming more closely involved in the growing cable business. TeleWest would be an obvious partner, given its undoubted size and power in the market. But any student of Michael Green’s corporate development strategy would say that ten per cent stakes are not really his game.
However, there may be another more complex issue in play, and that is the growing love-in with TCI, which has a large stake in TeleWest. Green may want to reinforce its cosy relationship with the powerful TCI.
Both the media and the City are waking up to the enormous clout of TCI, the world’s largest cable operator and one of the few media forces in the world that can take on Rupert Murdoch and win. TCI, through UK-listed Flextech, has just struck a deal with the BBC to make more and better use of the Corporation’s programming. Flextech and TCI won in this battle against BSkyB, which was desperate to get in on the act and came in late waving a cheque book. But the BBC wisely opted for clout rather than cash – as well as being wary of allowing Murdoch too dominant a position in the UK market. After all, what would a Labour Government make of Murdoch and the BBC in bed together?
As ever, whatever the market looks like, there are many other considerations behind who buys what: regulatory, political, cultural – and who knows who.