BAe likely to fire the first shot
VSEL shareholders anticipate big gains in battle of the bids
Sunday 28 May 1995
GEC is almost certain to counter-bid, reigniting the battle that began earlier this year and was interrupted by a Monopolies & Mergers Commission inquiry.
Many in the City are surprised that neither side launched a bid last week, even though Michael Heseltine, President of the Board of Trade, gave both companies the go-ahead on Tuesday.
"BAe has no reason to delay any longer," said Sandy Morris, engineering analyst at NatWest Securities. "So far they have improved their image by their handling of this bid. They have been the aggressor all along. They would lose their advantage if they are now seen dithering and waiting around for GEC."
Observers close to BAe said the company's preparations for a bid appeared to be further advanced than those of GEC.
BAe's 3.3-for-one share offer valued VSEL shares at around pounds 14 when the MMC stepped in before Christmas. Because of a rise in the company's shares, however, the same bid would now be worth nearly pounds 18. This substantially increases the cost of a bid for GEC if it renews its purely cash offer.
One banker pointed out that VSEL is worth more than it was six months ago, because it is more financially robust. The balance sheet published last week showed it had cash of pounds 411m at the end of March, against pounds 360m six months earlier. VSEL has a healthy order book and is about to start building its first large surface warships for many years.
City analysts believe that the bidding could go to pounds 20 per share. "GEC would be stupid not to push it as far as possible even if BAe wins," said one observer. "Because of the tax advantages, BAe can probably afford to pay more for VSEL in the end."
VSEL is expected to keep to the stance it held during the previous bid battle - showing no preference for either side. "We would be equally happy with either," Lord Chalfont, the company's chairman, said last week. He acknowledged that this left shareholders with the happy prospect of watching a battle that is likely to increase the value of their holdings significantly.
Lord Chalfont also said he expected there to be further rationalisation in the defence industry, even if this led to a loss of domestic competition. "I think it's an inevitable trend," he said.
- 2 Moscow voted the world's unfriendliest city
- 3 The excuses your boss is most likely to believe when you call in sick
- 4 I'm pansexual – here are the five biggest misconceptions about my sexuality
- 5 More than 11,000 Icelanders offer to house Syrian refugees to help European crisis
The excuses your boss is most likely to believe when you call in sick
Bono's group has made more money from Facebook investment than from all his music
Three-year-old ultra-Orthodox Jewish children told 'the non-Jews' are 'evil' in worksheet produced by London school
Wikipedia rocked by 'rogue editors' blackmail scam targeting small businesses and celebrities
More than 11,000 Icelanders offer to house Syrian refugees to help European crisis
Climate change: 2015 will be the hottest year on record 'by a mile', experts say
Jeremy Corbyn calls Osama bin Laden's killing a 'tragedy' - but was it taken out of context?
If these extraordinarily powerful images of a dead Syrian child washed up on a beach don’t change Europe’s attitude to refugees, what will?
Senior British politicians tell David Cameron: When dead children are being washed up on beaches, it's time to act
If you're not already angry about the refugee crisis, here's a history lesson to remind you why you really should be
Theresa May says migrants should be banned from entering the UK unless they have jobs lined up
iJobs Money & Business
£14000 - £16000 per annum: Recruitment Genius: This company was established in...
£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...
£20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250 ...
Voluntary and unpaid, reasonable expenses reimbursable: Reach Volunteering: St...