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Allied braces for knock-out bid from US rival Hercules

Allied Colloids, the speciality chemicals group, yesterday predicted that profits for the year to March would rise by more that one-third to pounds 74m and forecasted annual cost savings of pounds 11.5m in its last final defence against a pounds 1.1bn hostile bid from Hercules, its US rival.

However, analysts were predicting that the group was unlikely to retain its independence and that Hercules is preparing to make a knock-out bid for the group by upping its 155p a share offer to around 170p.

David Farrar, chief executive of Allied Colloids, said: "We have a great growth record. The problem is that in the past we have focused on growth rather than profit. In the two and a half years I have been in charge there has been a huge change in culture."

Allied Colloids claims it should be valued by the market at 174p a share, despite the fact that its shares were languishing at around 115p before the bid.

Hercules branded the defence "uninspiring" and claimed that profit forecasts were exactly in line with analysts' predictions. A spokesman for the group said yesterday: "They are not promising jam today. It is not even jam tomorrow. It is jam the day after that. Claims that they should be valued by the market at 174p are laughable."

Allied could look for a white knight or even consider a management buy- out if Hercules increases its bid.