Bear market undermines deals

BEAR MARKET pressures are threatening to undermine a string of deals and fund-raising exercises as share prices continue to slide in the wake of the Russian crisis and Asian fallout.

The list of corporate activity that could be affected includes JJB Sports' pounds 105m rights issue to fund its pounds 290m takeover of Sports Division and the battle between Henlys and Mayflower for Dennis, which makes bus chassis. The slump in share prices was also listed as one reason for the collapse last week of merger talks between Booker and Somerfield, the aupermarket group.

City observers fear JJB's pounds 105m rights issue looks set to flop leaving the bulk of the shares with the underwriters. JJB's shares open today at 432.5p, 7.5p below the rights issue offer price of 440p. It is understood 10 per cent of the shares have been taken up ahead of today's 3pm deadline.

Warburg Dillon Read is underwriting the rights issue and is likely to be left with most of the rights. Shares in JJB have fallen from a peak of 820p.

Falling prices have also swung the battle for Dennis in favour of Mayflower, the engineering group which is seeking to trump an approved bid by Henlys, the bus and coach manufacturer. Mayflower is offering 450p in cash for each share in Dennis in a hostile bid, disrupting an agreed cash and paper offer by Henlys.

Henlys' offer, of 7-for-10 shares plus 150p, values Dennis at 478p, based on Henlys share price of 468p. But further slides in the market will push shareholders towards Mayflower.

However, a Yorkshire door and window handles maker, which benefited from the crisis in Asia, said it was planning to float for an estimated pounds 70m.

Avocet Hardware gained a substantial advantage from the devaluing of currencies last year in Asia, where more than half of its products are made.

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