*** Man U strikes back
*** Marconi tripped by pension deficit
*** Are the miners back on track?...Diageo joins the war...but a tip for Diageo investors.. -------------------
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- Manchester United fans are on the offensive to stop American predator Malcolm Glazer from taking over the club.
- Now they've roped in Japanese investment bank Nomura, who will lend the fans as much as £100m to ward off Glazer. Nomura is prepared to lend £1 for every £1 of shares or cash committed by fan group Shareholders United or any other supporters.
- So just how many shares does Shareholder United need in order to give Glazer the red card? Quite a lot - as the group only owns around 2% of the club's shares...in comparison to Glazer's 28.1%. They've now written to around 30,000 individual shareholders, to request them to join the investment trust
- As it is, Glazer must bid for the Red Devils by 17 May - or back off for a further six months. Manchester's share price fell 2% to trade at 260p.
- Man U's share price fall did not help the FTSE 250 - which endured a rather tough week last week. The index fell 4%, to close at 6,728, at a four-month low. The mid-cap index shed nearly 6% in April.
- 'Investors are concerned about the domestic situation in the UK, with an election coming up and uncertainty over interest rates,' Seymour Pierce's Jim MacCafferty said before the weekend. 'Companies most exposed to the UK - those in the small and mid-cap area - are going to be impacted.'
- The FTSE 100 - consisting of multinational firms that are not as dependent on the economic cycle - traded 11 points up on Friday. The index still shed 1% last week, to trade at 4,801.
- Meantime, struggling telecom equipment group Marconi tumbled a further 12% on Friday - losing just under 50% of its share value last week. The fall follows BT's shock decision to not select the group as a supplier for its new £10bn network contract. Marconi's shares closed at 261p.
- So what can die-hard Marconi investors expect from their stock? 'Even if the management successfully broke up the business, it would be hard to realise greater value than 280p,' Goldman Sach's Tim Boddy said on Friday.
- Moreover, any knight in shining armour looking tosweep Marconi off its feet will undoubtedly be put off by Marconi's ugly pension deficit. According to the weekend press, the deficit currently stands at £136m - more than a quarter of Marconi's £546m market capitalisation.
------------------ - If you're looking for bargains on the blue chip index, look no further than the mining and steel sectors. Both sectors were the worst performers on the FTSE All Share index last month, as investors feared that demand for metals may have peaked. And both traded well into the black on Friday.
- Anglo American gained 3%, while steelmaker Corus traded 2.5% up. Rio Tinto also added 1.5% - despite the group admitting it's looking to add more uranium mines to its list, potentially by bidding for Australian group WMC Resources. WMC has already received a bid from BHP Billiton.
- And in the booze sector, market leader Diageo is considering joining the bidding war for Allied Domecq. The group could buy around £2bn of Allied's brands, without picking up any regulatory problems.
- 'Diageo is not just going to stand by and watch Allied being taken over,' a source said on Friday. 'They are talking to everyone and are likely to make a move in a matter of weeks.' But to claim Allied, Diageo will have to outmanoeuvre rivals Pernod Ricard and Constellation Brands - both who have already shown their interest in the group.
- A note to Diageo investors: just last week Barron's extolled the virtues of the group on their cover. Why is the group so strong? Because, as one bartender told Barron's, 'People want to get drunk and drunk fast.' And especially so, it seems, on Diageo's popular brands such as Johnnie Walker scotch and Captain Morgan rum.
- In America, Diageo's share price is trading at a 52-week high, while in the UK, its share price is close to two and a half year highs. Budweiser owner Anheuser-Busch shares, on the other hand, are trading in the US near a 52-week low.
- This means that there's a chance the two beverage makers' shares will re-converge. Which also means Diageo investors could be in for a tough time ahead. Don't believe me? Well, Warren Buffett reckons something's up: he recently acquired a large interest in Budweiser...but not in Diageo.
Until tomorrow,
Heather D'AltoMoney Morning
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