Small Talk: Collins sign-up could herald mega-merger at Ten Alps

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The Independent Online

Ten Alps, the television production company with Sir Bob Geldof and Brian Walden on the board, has just signed up Collins Stewart to act as its cheerleader in the City. So expect a big effort to get new fund managers interested in the stock over the coming weeks and months.

Ten Alps shares have trodden water this year, even though the company has managed an 84 per cent rise in interim revenues thanks to some hot new commissions. The Flight That Fought Back, about the events of September 11 2001, was the most watched show on Discovery US for five years, and it was a Ten Alps documentary that revealed George Bush had received instructions from God in the run-up to his invasion of Iraq.

The group is valued at £22m, but is ambitious. It has done five deals in the past four years, but all small, mainly cash acquisitions. Some investors are already seeing Collins Stewart's drive to improve the share price as a prelude to a merger deal that could transform the company.

The requirements on ITV and BBC channels to commission more programmes from independent companies, and the proliferation of digital channels gagging for content, means the independent sector is growing strongly. Shed Productions and RDF Media have floated this year and seen their shares rise. The expectation is that publicly quoted companies will use their shares to buy private rivals.

Ten Alps, meanwhile, is also likely to want to dispose as well as acquire. It has two remaining non-core divisions, an events management arm and a TV advertising business. Expect the latter to be sold soon.

Pharmagene tie-up

The merger of Pharmagene with the private US company Asterand is not likely to be its last bit of corporate activity. The Royston-based biotech abandoned its unsuccessful drug development work this year to concentrate on its division which collects and tests human tissue left over in hospitals. The faster-growing Asterand also collects and sells human tissue for medical research, so putting the pair together should create a global leader in thisfield.

Between them the pair collects samples from more than 50 hospitals across the globe, and supplies the tissue to 15 of the top 20 pharmaceuticals companies in the world. The theory is that these companies will increasingly test experimental drugs on fresh or frozen human tissue, cutting down on animal testing.

The combined group - to take the name Asterand - will be headed by Randal Charlton, the Detroit company's founder and chief executive. He began his career as a journalist, and recently wrote a book on women's soccer, but also has 10 life sciences company directorships under his belt. Ronald Openshaw, Pharmagene's caretaker chief executive, is staying on board as finance director. He is a former investment banker and clearly still has an appetite for deal-doing.

He will have been scouring the competitive landscape for a rival to buy, to help bring Asterand quickly to profitability. Medical Solutions and Cytomyx are the two UK-listed companies with tissue services divisions. Might a cheeky bid for one or the other be in the offing once Pharmagene's merger is voted through next week?

GTE expansion drive

Gas Turbine Efficiency, which floats tomorrow, looks just the sort of company that should be taking advantage of AIM, the London Stock Exchange's junior market, for growth companies. It has developed a technically impressive way to clean turbine engines used in aircraft and power plants and, having won the support of some big business partners for expansion outside its native Sweden, is raising £5.4m to fund additional marketing teams and assembly lines at its base north of Stockholm. GTE's key inventions are the hi-tech nozzles that spray cleaning fluids at high pressure in tiny droplets. GTE's major commercial breakthrough was a supply agreement with Rolls-Royce's industrial turbines business two years ago. The company starts trading with a market value of £13m.

Coolabi hammers out lucrative deal

Small Talk hears that Coolabi, the cartoon characters and films group, plans to extend its relationship with Hammer Films, for which it acts as agent in the UK. The horror flicks company is using Coolabi to come up with ideas for exploiting its ghoulish brand, through the development of figurines, trading cards and postage stamps.

It is a lucrative sideline for Coolabi, which takes a cut from each merchandising deal. And Roger Holmes, the chief executive, is confident he can add other brands to a portfolio that includes a cutesy rabbit called Somebunny to Love, who will appear on greetings cards and in fluffy toy form.

The company is concentrating most of its financial firepower and creative time on higher-risk entertainment properties, however, since it hopes to emulate the success of HIT Entertainment with new children's cartoon characters. Its PC Pepper could be the new Fireman Sam, if it gets commissioned in the spring, and Small Talk was particularly taken by the idea of DreamMakers, a Monsters Inc-style tale.

The trouble is that this is not a company getting the benefit of the doubt from the City, given its history as a producer of unsuccessful movies. On current plans, it doesn't seem likely to get to profitability without another equity fundraising - hence the share price has been sliding for months.

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