Bets placed on a Bass bid for William Hill

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Bass was tipped yesterday as a likely bidder for William Hill following an unexpected write-down in the value of the Brent Walker betting shops chain.

The write-down, from a value of pounds 696m to pounds 428m, was widely seen as the prelude to a disposal at a price of about pounds 450m.

The increasing speculation followed higher-than-forecast first-half profits from Bass and the refusal of Sir Ian Prosser, chairman and chief executive, to rule out any of the rumours that have made the company one of the City's favourite predator in recent months.

Bass, which already owns 930 betting shops through its Coral chain, is thought the most likely to snap up William Hill's 1,650 outlets in a deal that would make it Britain's largest bookmaker, well ahead of Ladbroke, which has 1,900 outlets.

Sir Ian played a straight bat yesterday to all the recent rumours, which have also linked Bass to a possible bid for Ladbroke and, most persistently, Allied Domecq's 50 per cent stake in Carlsberg Tetley, Britain's third biggest brewer after Bass and Scottish & Newcastle.

He admitted, however, that with gearing of only 23 per cent Bass had plenty of firepower.

John Leach, chief executive of Brent Walker, attempted to pour cold water on the speculation, describing the write-down as a simple attempt to "paint a true and fair picture of the value of the business. There is no hidden agenda".

Bass's shares soared yesterday after first-half profits emerged right at the top end of analysts' expectations. After interim pre-tax profits came in 10 per cent higher at pounds 289m, brokers pushed up forecasts to between pounds 670m and pounds 675m from previous estimates of about pounds 655m.

After touching 800p, the shares closed at 788p, 20p up on the day, as the market also digested an 8.5 per cent rise in the half-year dividend to 7.7p.

Since the beginning of 1995, Bass's shares have risen by more than 50 per cent, outperforming the rest of a rising stock market by 23 per cent.

Analysts were wrong-footed by a smaller-than-expected decline in the company's leisure retailing arm, which includes the Coral betting shops. At the time of Bass's annual meeting recently the company said first-quarter profits at the division were running 30 per cent lower than the previous year, thanks to the impact of the National Lottery and severe winter weather, but the decline was limited to only 17 per cent for the half year.

Brent Walker said yesterday its operating profits had fallen by 25 per cent as a result of the lottery. It said there had been a permanent diminution in the profitability of the business. Together with a small write-down in the value of its Pubmaster pub estate, there was a pounds 305m exceptional charge against profits, which led to a loss in 1995 of pounds 414.5m (pounds 142.5m loss).

Investment column, page 24

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