City interest in shares rise as analyst scorns rumours
Asda's apparent interest in Somerfield, as reported by The Sunday Telegraph, has prompted a mixed response from the City. The newspaper said the Wal-Mart-owned grocer may bid for 1,300-store Somerfield on its own, or strike a deal with one of the consortia circling the chain.

The deadline, set by the retailer's advisers Dresdner Kleinwort Wasserstein, has been extended to early this week.

While one city analyst received the report with scepticism, the markets acted favourably on the news. Somerfield's share price just missed the 200p mark, with a 1.66 per cent rise this morning - the first rise since the first week of the month.

Despite investors' willingness to trade on the news, Seymour Pierce analyst Richard Ratner was not convinced the rumour had any substance. He said: 'In our view, this is highly unlikely for two reasons. First, it would almost certainly lead to a Competition Commission referral. Secondly, the portfolio is the wrong size for Asda. It may be simply that it wants to buy some of the sites from a purchaser of the business to use them as George outlets.'

At least one consortium of investors is expected to make a bid for Somerfield of at least 205p a share, or£1.7 billion.

Asda has refused to comment on the story.

Topics