Airtours bid in balance

THE future of Owners Abroad, Britain's second-largest holiday tour operator, hangs in the balance this weekend with institutions evenly split on whether to accept a pounds 294m hostile takeover bid from Airtours or stick with the company.

Sources in both camps acknowledged that the result was going to be extremely close after a number of leading institutional shareholders unexpectedly indicated they would be backing Owners. The offer closes finally on Tuesday.

Thomas Cook, the travel agent owned by Germany's WestDeutsche Landesbank, is believed to be ready to make substantial purchases of Owners shares in the stock market on Monday morning in an effort to block the Airtours offer.

Thomas Cook has already made a tender offer for 12.5 per cent of Owners, conditional on the Airtours offer failing. Thomas Cook's proposed commercial tie-up with Owners would be jeopardised if Airtours won the bid.

Mercury Asset Management, with 15.04 per cent of Owners, has decided to accept the Airtours offer, but a number of other big shareholders, including Phillips & Drew Fund Management with just over 10 per cent and Gartmore with 7 per cent, are believed to have swung the other way.

Howard Klein, chairman of Owners, has being doing a furious round of institutional presentations over the last week in a last-ditch bid to see off the offer.

Many leading shareholders who had been minded to accept the Airtours terms were pleasantly surprised by the strength of the defence and are believed to have reconsidered their position.

Owners claims its tie-up with Thomas Cook will be worth far more to shareholders than the likely cost-cutting benefits of a merger with Airtours.