Albright & Wilson may buy part of US rival

ALBRIGHT & WILSON, the fine chemicals company at the centre of a bid battle between Rhodia of France and the US group Albemarle, is in advanced talks to buy part of a US rival in a deal which could scupper the French firm's bid.

News of the discussions comes amid growing speculation that Albemarle could increase its pounds 408m offer, trumping Rhodia's pounds 455m cash bid for the troubled UK group. Albemarle declined to comment yesterday.

The US company, which owns over 18 per cent of A&W, is expected to make a final decision over the next few weeks but analysts predict that it will raise its cash offer in an attempt to drag Rhodia into a bid battle.

The offer by the French group, majority-owned by the drugs giant Rhone- Poulenc, to buy A&W is also under threat from the UK group's talks with the US chemical company Solutia. A&W is believed to be the front-runner to buy the US group's phosphates division, which has been valued at around $200m (pounds 125m).

A victory by A&W, which is bidding with its US partner PCS, could derail the Rhodia's bid on competition grounds. Rhodia and A&W are two of the largest producers of phosphates, chemicals used in fizzy drinks and agriculture, and the addition of Solutia is likely to raise objections by competition authorities on both sides of the Atlantic.

By contrast, Albemarle is not a large producer of phosphates and would probably be allowed to buy the enlarged A&W. In its original offer, Albemarle said that it would support A&W's attempt to buy Solutia's phosphates division.

City analysts believe that the Solutia talks are the reason for the A&W board's failure to back the Rhodia offer and to keep their recommendation for the lower bid by Albemarle.

Rhodia, which has over 20 per cent of A&W, declined to comment yesterday but industry experts said the French group could try to stop the A&W/Solutia deal by appealing to the Takeover Panel.

They believe the French could claim that A&W's purchase of the Solutia's division is a "frustrating action", as it clearly hampers Rhodia's bid, and should be stopped.