BAe snubs joint-bid offer from GEC
Monday 24 October 1994
Sources said the proposal was made last week during a meeting between Dick Evans, chief executive of British Aerospace, which recently launched its own agreed pounds 489.3m bid for VSEL, and Lord Weinstock, managing director of GEC.
The move has been interpreted in some industry quarters as a last-ditch attempt by GEC to avoid the acrimony that would most certainly ensue from a contested takeover fight.
Speculation mounted in the City towards the end of last week that Lord Weinstock, who has already disclosed his interest in owning VSEL, had started sounding out the Government as to whether it would block a counter-move by GEC.
A joint bid might lessen the Government's concerns about the anti-competitive implications of seeing GEC with complete control over Britain's warship-building yards. GEC already owns the Yarrow yard.
BAe, however, is said to be firmly against a joint bid because it believes that the competition issues would remain even if GEC assumed a management hands-off role in the venture.
Mr Evans said at the weekend: 'A GEC takeover would eliminate competition.
It would prevent the emergence of competition in naval- warship prime contracting in Britain.'
A joint venture would also give GEC greater access to knowledge about defence systems integration processes for considerably less money that it would have to pay if it went it alone and topped BAe's bid.
And a combined bid, it is understood, would scupper financial gains that BAe stands to make by sheltering tax losses within VSEL.
It has been estimated that the tax losses would see pounds 61m of profits from VSEL flow straight through to BAe's bottom line, significantly enhancing earnings per share. The acquisition would also strengthen BAe's balance sheet by around pounds 300m.
BAe's public thumping of the competetive drum, however, may not be heard in Whitehall. The Government has swiftly cleared BAe's path to taking over VSEL and has signalled to the European Commission to steer clear of what it clearly regards as a sovereign matter.
Defence analysts in the City are becoming more convinced that GEC, which has already requested and received confidential financial information on VSEL, will soon make a move.
Movements in the three companies' share prices over the past week increasingly point towards a contested battle. BAe's shares stand at 470p, valuing each VSEL share at pounds 12.91 on the terms of its 2.747- for-1 all paper offer. The shares trade at pounds 13.10.
Shares in GEC, which is sitting on a mountain of cash, eased towards the end of last week as the speculation about a counter-bid built up. The consensus among dealers in the City is that if GEC pounces it will do so with a knock-out cash bid above pounds 14 - perhaps as high as pounds 14.60.
At pounds 14 a share, VSEL would be valued in excess of pounds 530m against a current stock market worth of pounds 496.5m.
Meanwhile, it has emerged that an amendment was made to the service contract of Rob Holden, finance director of VSEL, the day before BAe made its bid. A clause was added giving him the right to compensation of two years' salary instead of one, should he leave if BAe's bid wins.
Lord Chalont, chairman of VSEL, defended the decision, saying that discussions to amend the contract were in hand beore BAe made its intentions known. Mr Holden, who is paid pounds 97,500 a year, was promoted from acting finance director to the full post in the summer, follwing the departure of Norman Broadhurst.
International Women's Day 2014: The shocking statistics that show why it is still so important
Singapore sting: Sky-high prices are pushing locals to the edge of affordability
International Women’s Day: 'When a man gives his opinion, he's a man. When a woman gives her opinion, she's a bitch' - feminist quotes from female icons to inspire you
International Women's Day 2014: Cherie Blair - ‘Today is a chance to see how far we still have to go’
Dead woman's body found sitting in a car after six years after direct debits ran $54,000 bank account dry
Britain's top vet sparks controversy with call for ban on slashing animals' throats in 'ritual' slaughters for halal and kosher meat products
Ukraine crisis: Russia dismisses '3am ultimatum' as 'total nonsense'
If you're horrified by a flame-roasted dog, you should be shocked at a hog roast
Poor 'live like animals' says Boris's privately educated sister after going on 'poverty safari'
White people become less racist just by moving to more diverse areas, study finds
Exclusive: Impact of immigrants on British workers ‘negligible’
- 1 International Women's Day 2014: The shocking statistics that show why it is still so important
- 2 Orgasm machine to deliver climax at the push of a button
- 3 Singapore sting: Sky-high prices are pushing locals to the edge of affordability
- 4 Liam Neeson turned down James Bond role because late wife Natasha Richardson said she wouldn't marry him if he took it
- 5 Dead woman's body found sitting in a car after six years after direct debits ran $54,000 bank account dry
iJobs Money & Business
£12000 per annum: Inspiring Interns: The company works with Tier 1 FTSE 100 Ba...
£32000 - £36000 per annum + generous benefits: Pro-Recruitment Group: * TAX * ...
£37000 - £40000 per annum + £20000 benefits package: Pro-Recruitment Group: **...
£30000 - £35000 per annum + generous benefits: Pro-Recruitment Group: Mixed Ta...