BET claims Warburg in breach of Panel rules

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The Independent Online
BET yesterday accused SBC Warburg, Rentokil's broker, of breaking the takeover rules, just a day before the pounds 2bn bid for the business services group is due to close.

The latest spat between the two sides followed SBC Warburg's sale on Wednesday of 27 million BET shares to Salomon Brothers for onward transmission via Hoare Govett to a Rentokil associate, Retailpac.

BET, led by chief executive John Clark, claimed that the deal breached Takeover Panel rules, which prevent Warburg, as broker and underwriter to the bid, carrying out any dealings "with the purpose of assisting the offeror or offeree company."

Initial investigations by the executive of the Takeover Panel, which oversees bid and deals in the City, suggested that no rules had been broken. The panel said: "On the basis of the explanations received so far, the executive does not believe any such breach has occurred."

The executive is understood to have made its initial ruling following interviews with representatives from Warburg, Salomon and Hoare Govett and having listened to tape recordings of relevant telephone conversations. But the panel was still having discussions with BET's advisers last night, leading to speculation that it may change its stance. BET had claimed that the shares, representing just under 3 per cent of the group, should be disallowed as acceptances to the Rentokil bid.

By Wednesday evening, the bidder had amassed a 7.5 per cent holding through purchases in the market and claimed a further 3.4 per cent from earlier acceptances received.

Rentokil shrugged aside the dispute and bought a further 500,000 shares yesterday at the cash alternative price of 202.5p. Clive Thompson, the chief executive, remained optimistic about the outcome. "We remain confident. We have now completed our rounds of presentations to institutions. We have now done over 50 and I am delighted at the way they have been received."

Mr Thompson said he had received a great deal of support. "They have questioned in great detail the strength of our proposition. They have questioned deeply what we will do with BET... and my reading of the outcome of these presentations is that we will have a high level of support."

He dismissed the latest BET complaint to the Takeover Panel as technical matter. "We would expect the panel to confirm their preliminary statement", he said.

BET's shares dropped 1p to 203p yesterday, just above the level of the cash alternative, but they remained well below the main cash-and-shares offer. That was worth 216p a share last night, after Rentokil's shares added 2.5p to 360p. The bidder's revised offer is for nine new shares plus pounds 10 in cash plus dividend payments totalling 80p for every 20 shares in BET.

This is not the first time the Takeover Panel has intervened in the bid. In February, the panel criticised Lazard Brothers, one of Rentokil's advisers, for failing to keep it informed about its client's intentions. Bill Staple, then director general, voiced concerns about a market leak prior to the announcement of the bid.

Earlier this month, the panel called on NatWest Markets to make clear its position as underwriter to the bid after its broking arm issued a research note which described the initial offer as generous.