CE Heath confirms talks with Inchcape

ONE OF Lloyd's largest brokers, CE Heath, confirmed yesterday that it had been in takeover talks with Inchcape, the motor distributor and services group. But it said talks had taken place in the summer and were 'suspended' in September.

The broker's shares fell on the announcement, closing 11p down at 403p. They had risen 13 per cent over the Christmas holiday from 365p to 414p. Analysts said this may have been helped by a Kleinwort Benson 'buy' note issued in the run-up to Christmas, as well as by the Inchcape rumours.

The board of CE Heath said it had 'noted the sharp upward movement of the group's share price over recent days' trading and comment in the press linking it with Inchcape'.

It confirmed the talks with Inchcape, now suspended, and said: 'The board has no further comment on this matter.'

The Inchcape rumours had been spurred on by speculation over Hambros' attitude to its 14 per cent stake in CE Heath. Hambros, it was said, wanted to get out, and a full takeover by Inchcape would be a suitable opportunity.

No comment was available from Hambros yesterday. It is understood, however, that it wants to support any moves made by CE Heath's board and to be seen as a friendly investor.

In November CE Heath reported that half-year profits had risen from pounds 8.9m to pounds 11.6m. The company said worldwide insurance broking operations increased profits by 59 per cent on the comparable period of the previous year, to pounds 5.8m.