IT HAS not been everyone’s cup of tea since demerging from Kingfisher in July – because of its heavy gearing towards the French economy and the euro – but Kesa Electricals was certainly in the spotlight yesterday. The Comet-to-Darty electrical retailing group jumped 16p to a peak of 254p on persistent buying sparked by, among other things, vague talk of a bid approach.
Demand was also stimulated by gossip that the long-awaited outcome of the Office of Fair Trading’s investigation into extended warranties will be published before the end of the week. Dealers heard that its findings will not be as bad as first feared.
At the end of September, the Competition Commission handed a 1,300-page report on its 15-month probe to the Department of Trade and Industry which said it would announce a final ruling within 45 working days.
The report is expected to restrict sale of warranties and will allow customers a ‘cooling off’ period, entitling them to a refund if they cancel within 60 days. Cancellation after that would be possible with a refund linked to the length of the warranty period remaining.
Rival Currys-to-PC-World group Dixons has a huge exposure to extended warranties which account for up to 30% of its UK profits. It closed 2 1/2p better at 134p after analysts gave the thumbs up to its decision to sell 48.4m shares in French internet provider Wanadoo for £208m, or 10.7p per share. Dixons will retain 37.5m shares, worth £161m or 8p per share.
Extract from This Is London