The shares, strong recently on hopes that forthcoming research data will bring positive news for the group's Marimastat anti-cancer drug, slumped 20p to 220.5p, having been 23p down at one stage, as news of the sale leaked out.
The two unit trusts, the European Growth Fund and the European Capital Growth Fund, sold 22.1 million shares at 213p yesterday via a placing conducted by Morgan Stanley. The brokers refused to reveal the identity of the buyers.
The DMG holding in British Biotech, revealed as 11.3 per cent last month, followed large purchases by Mr Young. Subsequently reduced to 10.9 per cent, the stakes held in the three unit trusts represented one of their more liquid investments. But although Deutsche Bank, Morgan Grenfell's parent, was forced to pump pounds 180m into the funds to buy shares in obscure continental companies acquired by Mr Young, the fund management group denied yesterday's sale had any connection with the former manager's activities. James Murray, director of corporate affairs, said Stuart Mitchell, Mr Young's replacement, had been in place for a month.
"This was simply the fund manager exercising his right to realign his portfolio." The proceeds of the sale would be reinvested in due course and none of it would be used to reimburse Deutsche Bank.
The group still held British Biotech shares in a number of funds, including the two selling today. The disposal "does not reflect a change in our view of Biotech's prospects. Clearly if it did, we would be selling more and not just from these two funds". No more share sales were in prospect from the unit trusts, he added.
British Biotech, meanwhile, put a brave face on yesterday's move. James Noble, the group's finance director, said he was unconcerned about the sale, which had been widely anticipated. "It was inevitable they were going to sell a chunk of their shares and they did it all in 10 minutes, I think, this morning, which is a pretty satisfactory outcome."
The remaining 8 per cent or so held by Morgan Grenfell was "as safe as any other shareholding". Analysts expect further volatility in the share price in the run-up to and immediately following a forthcoming cancer conference in Vienna.Reuse content