Ex-Medeva boss picks a shell

Ian Gowrie-Smith, the Australian behind the acquisitive growth of the drugs group Medeva, was responsible for a sixth of all the shares traded on the stock market yesterday as he paid £2.8m for a 29.8 per cent stake in a new shell company.

More than 110 million share trades were recorded in Black & Edgington after Mr Gowrie-Smith teamed up with Nigel Wray, head of the fast-growing property company Burford, to move into the loss-making marquee business.

The shares jumped from 1p to 2.5p after the two acquired 154 million shares at 1p. They also bought convertible preference shares that could convert into a further 125 million shares, theoretically giving them more than 50 per cent of the company's enlarged capital. Mr Gowrie-Smith said the shares would not be converted if it meant their combined holding rose above 29.9 per cent, forcing a full bid for the company.

Since he stepped down as managing director of Medeva in 1994, the market has speculated that Mr Gowrie-Smith, who with David Lees, finance director, shared a controversial £1.6m consultancy contract after resigning, would land on a shell company to try to repeat Medeva's rapid growth.

Yesterday he admitted that the market would be impatient for developments, having increased the value of Black & Edgington's shares by 150 per cent on the back of his move.

There are no immediate plans for the company, which lost £1.07m in the year to last July. Any acquisitions are expected to be in pharmaceuticals.

Recently, shares in the night storage heater maker Hewitt experienced a similar share price surge after the two men underwrote a one-for-one rescue rights issue. It is thought that Hewitt was acquired to expand the business while the Black & Edgington purchase is regarded as a pure shell deal.

Mr Gowrie-Smith rose to prominence as the acquisitions man at Medeva, who masterminded a string of deals for Bernard Taylor, the former Glaxo head behind the company's rapid rise.

His departure followed criticism of Medeva after it encountered problems with two US acquisitions, warned on profits and saw its shares plummet.