Derek Pain: The Essenden story drags on, with three weeks still to go...

Essenden, running a chain of 10-pin bowling alleys, says talks with Harwood are 'progressing well'

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The Essenden bid story drags on. For the second time, the City’s takeover panel has extended the offer deadline. The possible deal for the No Pain, No Gain portfolio constituent was announced in March, with negotiations expected to be completed by 19 April. The cut-off was then put back until last weekend.

Another date has now been agreed, the 26th of this month. By then the likely acquirer, Harwood Capital, should either bid or shut up. I would not be surprised if it announced its intentions before the end of the revised period. Whether it can push the talks even further into the future could, I suppose, rest with the panel. But surely three months is long enough.

Takeovers have become much more complicated than they were in my younger days. That is not such a bad thing. Certainly in the 1950s and 60s, a succession of snatch-and-grab deals appeared that were not beneficial to shareholders, big or small. It was a particularly unsavoury affair that resulted in the formation of the panel.

A former constituent, the Spirit Pub Co, has been under the bid shadow since September. I sold at a handsome profit in January, yet the deal has still to go through. Mind you, the acquisition by brewer Greene King has provoked seemingly minor competition worries that should be resolved soon.

Essenden, running a chain of 10-pin bowling alleys, does say that talks with Harwood are “progressing well”. But, as is customary in these bid situations, it observes that there is no guarantee an agreement will be clinched. For once, competition authorities are unlikely to interfere.

The group has been revitalised by chief executive Nick Basing, with the bowling operations becoming more rounded entertainment centres. Underlying pre-tax profits last year were almost £5.4m. Three years ago the shares were down to 5p. The portfolio arrived at 24p; the current price is around 80p, capitalising Essenden at £17.1m.

Harwood, an investment group, is close enough to Essenden to have a pretty good idea of the business. After all, it has 34.1 per cent of the capital and representation on the board. Maybe it is just a question of price.

Another major shareholder, Trefick, sold out last year. Besides Harwood, the other significant shareholder is the Schroder investment group, which sits on 18.2 per cent.

The appointment of banker Alison Brittain as the incoming Whitbread chief executive has not received a rapturous stock market reception. But her arrival could indicate that the leisure giant does intend to eventually float off its highly successful Costa Coffee division, thus satisfying one of the City’s pet assumptions.

Rumours of a Costa sell-off have circulated for some time. Three years ago, Christopher Rogers, then finance director, took charge. Many saw the switch as a prelude to the coffee chain enjoying its own freedom cup. The fact he has not been accorded the chief executive role could further strengthen the theory that Costa’s place in the Whitbread hierarchy will soon end.

Whitbread’s interests range over budget hotels, pub/restaurants as well as Costa. With such diversified operations, it is little wonder that a hive-off occupies City minds.

Finally, support services group Mears is splashing out £11.3m on increasing its homecare division by acquiring two operations from Care UK. Currently loss-making, the businesses have contracts with around 90 local authorities and others.

yourmoney@independent.co.uk

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