Goldshield war may run and run as counterbid rolls in

Tonight it was the Fuhrers' turn to launch a counterbid — seven days almost to the hour after the latest offer from Midas Bidco, the vehicle being used by Goldshield's former bosses and backed by Hg Capital.

The Fuhrers own the Neopharm drugs group. Today their AIT Investments business offered 480p a share, or £176.8 million — bettering Midas Bidco's previous 460p tilt. Will this be the end of it? Unlikely, say investors, who chased the shares up well beyond the new offer price at 489.5p, up 22p on the day. Shareholders should enjoy the ride on this one for some time. Before the bidding began in June, Goldshield was changing hands at 324p.

The smattering of deals around in London, plus the welter of big takeovers on Wall Street, has played a big part in keeping market optimism going in the past adrenaline-fuelled few months. Indeed, sentiment is running so high that even this afternoon's awful set of non-farm payroll figures from the US was not enough to keep the buyers out for too long.

Despite first falling below 5000 on the news, the FTSE 100 index managed to claw its way back to 5012.29 by this evening, as Wall Street investors toughed it out. The Dow Jones Industrial Average opened down but clawed its way back to level pegging as the afternoon sped on. It was pretty much flat at 9510.04.

Lessons from across the Pond are not always relevant, but here's one that may turn out to be a timely early warning. Severe food price falls in the US are likely to have a major impact on supermarket earnings in the States, and a similar flood of cheaper food here could be the signal to get out of the UK supermarket sector.

Citigroup today told its clients to sell all three of the big UK food retailers — Sainsbury's, Tesco and Wm Morrison — on the basis that what has happened over there is about to be repeated here. In January, US analysts were confident of decent earnings growth from the supermarkets sector. Now they reckon their three big supermarkets — Safeway, Supervalue and Kroger — will see earnings shrink by 14% this year and next.

In the UK, August food prices were 1.2% below May's peak, and Citi reckons September will show a significant fall. It warns that year-on-year inflation, which was 11.4% in February, will turn negative by December. Cheaper food may be good news for consumers but it will eat away at supermarket margins. Consequently, Citi says the current consensus predictions for next year's earnings are too high.

Wm Morrison, 1.7p lower at 276.1p, is Citi's favourite due to its "virtue of self-help, trading momentum and scope for store growth" but it still warrants a sell. It sees slowing like-for-like growth at Sainsbury's, flat at 323p and also a sell, ditto Tesco, off 2.9p at 391p, where UK sales performance remains "uninspiring".

Legal & General, 4.85p lower at 83.1p, headed the FTSE fallers choking off a recent run fuelled by speculation that rivals including Australia's NAB or Resolution was mooting a bid. Despite rumours that advisers have been appointed, L&G was punished alongside other life insurers for their exposure to equities during the anticipated market correction.

Soft drinks group Britvic bubbled 7.9p higher to 351.97p on vague talk that shareholder PepsiCo is thinking of a full bid. Britain's second-biggest non-alcoholic drinks group has seen its shares rise by more than 30% this year helped by sparkling sales growth. Britvic shareholders were disappointed earlier in the year when private-equity group Permira sold its 14% stake in lieu of launching a full bid.

Stockbroker Singer is advising clients to jump into bed with Dunelm, the out-of-town retail outfit that specialises in cheap and cheerful sheets, curtains and other home furnishings. Dunelm, down 1.9p at 305p, does not command a large presence in the capital so you could be forgiven for not noticing it on your weekend shopping jaunts. This though, says Singer, is why it is a good bet. With just 85 superstores and many areas of the UK not covered, "Dunelm has significant room for expansion". Singer has pencilled in a 12% rise in profits to £59 million this year on the assumption another 12 superstores are opened. Next year, shareholders should see 9% growth in profits on the basis that 10 more stores are opened but it could be significantly more.