BBA attacks Lucas
Sunday 09 June 1996
After a week of speculation, BBA finally announced late on Friday that it did not intend to make an offer for Lucas "in the absence of a Lucas board recommendation". And Lucas announced that its planned pounds 4bn merger with Varity of the US would continue as planned, citing the compelling industrial logic of combining the two automotive parts companies to create the world's third largest brakes business.
Lucas also poured cold water on earlier hints it had made that it would sell its aerospace division to provide a "sweetener" to shareholders, who receive neither cash nor a bid premium in its share swap with Varity.
BBA sources say it was caught on the hop by a "flushing-out" campaign by Lucas which, they claim, leaked its name, along with that of Siemens and TI, to the media last weekend.
While Siemens and TI quickly issued curt denials, BBA remained officially non-committal until the Takeover Panel, the City's bid watchdog - in response to sharp movements in both Lucas and BBA shares - forced it to admit interest in Lucas before its plans were complete.
The Panel has recently been far quicker to force statements out of firms hit by media speculation; BBA's allegations, however, suggest it may be increas- ingly used as an unwitting pawn by sharp-witted advisers.
The weeks events are now thought to have cleared the decks of potential hostile bidders and will allow Lucas to complete the link-up with Varity in September unmolested. However, analysts expect the group to show no spectacular short-term growth and say the combination will be much more attractive - and not much more expensive - to potential predators.
BBA, meanwhile, must pick up the pieces. Roberto Quarta, the chief executive, is known to have come to the same conclusions about the future automotive consolidation that precipitat- ed the Lucas-Varity marriage.
Mr Quarta has successfully restructured BBA in two and a half years at the helm but must now decide to opt for another merger.
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