Bank explores Tiphook management buyout

HAMBRO MAGAN, the City merchant bank, has explored the possibility of mounting a management buyout at Tiphook, the British transport company recently at the centre of a stock market controversy.

According to US sources, the merchant bank, which is chaired by Rupert Hambro, sent potential US investors a mini-prospectus on the company a few months ago. Mr Hambro, who was unavailable for comment, has been a non- executive director of Tiphook since 1990.

The Hambro Magan document was known as 'the Blue Book' and although a code name was used instead of a company name in part of the book, there were a number of analysts' briefing documents on Tiphook towards the back.

'You didn't need to be a brain surgeon to know who they were referring to,' said one banker who had received it. The books are believed to have been distributed widely, without the knowledge of Tiphook's main advisers.

The attempted management buyout did not get off the ground, but Robert Montague, the company's chairman, has been told by many of his advisers that he would do well to take his company private. Mr Montague founded the group in 1978 and has been its executive chairman since. Recently, some shareholders have suggested he should separate his dual role as chairman and chief executive. There have also been suggestions that the group should appoint a couple of strong non-executive directors.

There has been a growing uneasiness among the company's remaining UK advisers. Lazard, the merchant bank, confirmed recently that it had stepped down several weeks ago as the company's adviser, leaving Morgan Grenfell to step into the breach. Market sources say that they would not be surprised if Morgan Grenfell and UBS, the company's broker, were not also considering their positions. Neither would comment.

Some expect Tiphook to appoint a US broker shortly, to serve its growing number of investors in the US. Last week, Mr Montague was forced to address a telephone conference of US investors to dampen down rumours that the company had been approached by a potential bidder.

Tiphook's shares, which have been on a roller-coaster ride in the past few months, rose 47p on Thursday to 244p on the stories that surfaced the previous day in the US. Paul Ehrlichman, managing director of Brandywine Asset Management, a US investment company, was quoted on US television as saying that he saw the possibility of a buyout of Tiphook within the next six to 12 months.