UFO Info Week-End

Foreign & Colonial and M&G also backed the company giving the company just over 15 per cent

Foreign & Colonial and M&G also backed the company, giving the company just over 15 per cent.Northern has already stirred up controversy this week when BZW and its advisers, Schroders, bought 2.3 per cent of the company. CalEnergy made furious complaints to the Takeover Panel claiming the two companies were effectively indemnified against any losses on the shares because of the fees they are likely to earn from the bid campaign, but the Panel rejected the argument.In addition, Northern’s vociferous army of some 100,000 small investors, who together own around 17 per cent of the company, are also likely to stay loyal or not to respond to the offer at all. Some other investment funds were also staying on the sidelines last night. One fund manager, who did not want to be named, said: “We have a policy of only accepting an offer if it’s agreed.” If CalEnergy fails, it will be the second time Mr Morris has fought off a hostile attack. His earlier success was the “scorched earth” defence of the pounds 1.2bn Trafalgar House bid in 1994. By Febuary 1995 Mr Morris had stunned investors with a pounds 560m package of financial incentives worth a total of more than 500p a share, should they reject the offer..

Newman Tonks, the Birmingham-based door knobs, locks and handles group, yesterday attacked the decision of its biggest shareholder to immediately back the hostile pounds 196m offer made earlier this week from FKI, the acquisitive engineering group. M&G, Newman Tonks’ biggest shareholder with an 11.2 per cent stake, irrevocably accepted FKI’s offer on the day the bid was launched while Britannic Assurance, another institutional investor, also pledged its 2.2 per cent stake.
The move was unusual because M&G, which said Newman Tonks had “demonstrably underperformed”, tends to back incumbent management.But in his first response, Geoff Gahan, Newman Tonks’ chief executive, queried the fund manager’s decision: “I find their behaviour quite strange. Why didn’t they sell their stake when the share price was higher earlier this year? They have never forgiven us for realigning [cutting] the dividend four years ago.”Mr Gahan was speaking after Newman Tonks announced the sale of its 33 per cent minority interest in Tesa, its Spanish security products manufacturer to Williams, the diversified industrial group, for pounds 27m. The deal, which is subject to shareholders’ approval unless FKI’s offer lapses, reduces Newman Tonks’ gearing to about 10 per cent.”We are deploying financial resources away from areas not considered hard core and concentrating on controlling interests in businesses with potential for strong growth in international markets,” Mr Gahan said. But he declined to say whether other deals were in the pipeline as part of Newman Tonks’ bid defence.

Last night FKI posted its offer document to Newman Tonks’ shareholders, a move that sets the 60-day bid timetable clock ticking.FKI urged shareholders to “exit a business with a dismal track record at a significant premium” and to “participate in a business with a strong management team and a proven track record”.Halifax-based FKI is offering a mixture of cash and shares worth 150p, or pounds 196m, and a 140p cash alternative. FKI says it is offering at least 20 times the consensus forecast earnings for Newman Tonks this year.The offer is being funded by a fully underwritten conditional rights issue of two new FKI shares for every 13 existing shares held at 175p to raise pounds 152m. The rest of the deal will be funded from internal resources, taking FKI’s gearing up from more than 60 per cent to 80 per cent.Newman Tonks is FKI’s first hostile takeover. In his letter to shareholders, Jeff Whalley, FKI’s chairman, said he had approached Newman Tonks’ board with a view to making a recommended offer but had been unable to establish a meaningful dialogue.Mr Gahan dismissed FKI’s latest move.

“There is nothing new in the document which only confirms their derisory offer.It will be a long hard battle.”. British Telecom was defeated yesterday in its High Court challenge to controversial fair trading powers planned by Don Cruickshank, the industry regulator. The ruling, which was warmly welcomed by rival telephone operators, means from the new year that Oftel, Mr Cruickshank’s watchdog body, will be able to intervene to ban any action by BT which he believes could thwart competition. BT had claimed Mr Cruickshank was acting unlawfully by elevating himself judge and jury over the company’s affairs with no right of appeal.
The ruling, which has widespread implications for UK competition law, will now be extended by Oftel to other telecommunications operators and will also be applied to BSkyB as it rolls out its digital satellite television service.Simon Holmes, a leading competition lawyer with City firm SJ Berwin explained: “It is another step towards a more competition-orientated regime and another step away from a system which is purely focused on specific regulation. It’s a trend which we are anticipating for other regulated industries as competition takes hold.”Pointing to the transformation in the telecommunications industry since Oftel was created at the time of BT’s privatisation in 1984, Lord Justice Phillips and Mr Justice Hooper agreed the system of regulation should also be allowed to evolve. However, they admitted that the new licence condition, which mirrors European law, was a “novelty”.Ironically, BT also lost on what the judges said was its strongest argument, that Oftel had unlawfully removed the right of appeal to the Monopolies and Mergers Commission, because the company had already consented to the new powers The court challenge was to test their legal validity.. Kenneth Clarke claimed the credit for Christmas good cheer on the economy, with new figures yesterday showing the fastest growth in living standards since 1989 and a healthy balance of payments.