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EMI back in the groove as City dances to merger tune

MERGER hopes saw the world's third-biggest music maker, EMI, hit the right notes with investors today, lifting it 3p to 2261/2p.

Speculators have worked themselves into a lather over news that rival Warner Music, ranked number four, is considering a float in the spring that would value it at almost Pounds 3 billion. It was sold by parent company Time Warner for Pounds 1.4 billion to a consortium led by financier Edgar Bronfman earlier this year.

Brokers say a Warner Music float could pave the way for merger talks between the two sides to restart. An attempt four years ago by EMI was blocked by regulators and last year it walked away after being outbid by the Bronfman consortium which topped its offer.

Share prices generally traded within a narrow range but were seemingly unaffected by a big sell-off on Wall Street overnight in the wake of poor results from Fed Ex and US investment bank Morgan Stanley.

In thin trading, the FTSE 100 index rose 3.8 to 4596.1.

Industrial gases supplier BOC slipped 51/2p to 8721/2p after a downgrade by US investment bank JP Morgan which has cut from overweight to neutral and urges clients to switch into Air Liquide.

It says the shares have outperformed the sector this year which means it can no longer justify the overweight rating. Uncertainty over the semiconductor industry and pressure of litigation from welders, who claim they have been affected by gases, will mean a volatile performance for the shares.

Trading got under way on a when-issued basis in car insurance broker Admiral after the shares were placed at 275p, virtually in the middle of the 245p to 300p range set by its financial advisers.

The price traded at 2861/2p.

The group, which also owns online insurer Elephant.com, has raised Pounds 231 million for the company and provided a windfall for a large number of employees who own shares. The entire company is valued at Pounds 711 million.

Steelmaker Corus retreated a further 1/2p to 501/2p following a flurry yesterday that saw 143 million shares change hands. It looks as if Russian shareholder Alisher Usmanov may have been feeding more of his 13.4% stake back into the marketplace after selling 100 million shares through broker Credit Suisse First Boston earlier this month.

Corus shares have almost doubled in price since the start of the year and Usmanov must now be sitting on a big profit.

His attempts to gain a seat on the board have been knocked back by the Anglo-Dutch group which recently returned to the black following years of heavy losses.

The company is capitalised at Pounds 2.2 billion and is on the verge of regaining its place in the Footsie.

SSL, owner of Durex condoms, has sold its US-based Silipos subsidiary for $15.5 million (Pounds 8.7 million).

The business produces gel-based products for prosthetic, orthopaedic and skincare uses and marks the final exit for SSL from its medical businesses, leaving it focused on consumer healthcare products. Silipos sales in the last financial year were Pounds 12 million. The shares firmed 1p to 280p.

Drugs distributor Alliance UniChem shed 8p to 662p after US broker Lehman Brothers downgraded from overweight to equal weight. It says much of the improvement of the retail operations was already in the price.

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