GEC considers offer for VSEL
Friday 14 October 1994
VSEL is already the subject of an agreed bid by British Aerospace, which announced its pounds 490m all-share offer on Wednesday. BAe's arch-rival GEC can afford to trump the bid with cash.
VSEL confirmed that GEC had asked for information on the company as a bona fide potential offerer. The VSEL board said it continued to recommend the BAe offer as it was unable to assess the likelihood of a counter-bid. No information has yet been sent to GEC.
VSEL's shares rose 10p to pounds 13.20 after GEC's interest emerged. Shares in British Aerospace fell by 4p to 467p, which values each VSEL share at about pounds 12.80 under the terms of the deal.
Some City analysts said that GEC would probably be willing to offer up to pounds 13.60 a share for the submarine manufacturer. GEC's shares closed 4p up at 300p.
City analysts believe that GEC fears it will lose out to BAe in the market for managing large naval contracts. One of the main reasons for BAe's bid is that it wishes to become a prime contractor in the naval sector and feels VSEL completes its portfolio of skills.
Analysts said the same industrial logic given for the BAe bid applied to a potential offer from GEC. However, some said it could be a spoiling tactic intended to undermine the position of its adversary.
BAe, which has net debt of pounds 91m, would also benefit from VSEL's pounds 288m cash and from a tax position that would shelter VSEL's earnings for the foreseeable future.
A bid from GEC could raise competition issues as the group already owns the Yarrow shipyard on the Clyde. The Ministry of Defence is likely to maintain that competition in the marketplace should be kept.
A spokesman for the ministry said that BAe's bid and any counter offer from GEC were a matter for VSEL, its shareholders and the regulatory authorities. The Office of Fair Trading has already written to BAe for details of its proposals to acquire VSEL.
VSEL, formed through a management buyout in 1986, is planning to bid for the pounds 2.5bn contract for five Trafalgar class nuclear submarines. The company believes that the backing of a strong partner will play a vital role in securing the work. Around 2,500 jobs at the Barrow yard in Cumbria depend on the Trafalgar deal.
View from City Road, page 33
Presents unwrapped, turkey gobbled... it's time to relax
- 1 Shia LaBeouf claims he was raped during #IAMSORRY art installation performance
- 2 This letter from a reader explains why women can’t play football
- 4 Scientists predict green energy revolution after incredible new graphene discoveries
Sean Abbott: Messages of support flood in for bowler after death of Phil Hughes
Plebgate: Andrew Mitchell’s reputation in tatters as judge rules he used the word ‘pleb’
Dr Lam Hoe Yeoh: Voyeur doctor jailed for eight years after using network of hidden cameras to film patients, colleagues and friends on the toilet
Kim Jong-un 'in dire need of allies' within his own government as younger sister appointed to senior role
Scientists predict green energy revolution after incredible new graphene discoveries
Ukip says babies born to immigrants in the UK should be classed as migrants – which would include Nigel Farage’s own children
Obama: The only people with the right to object to immigration are Native Americans
The young are the new poor: Sharp increase in number of under-25s living in poverty, while over-65s are better off than ever
Tamir Rice: 12-year-old boy playing with fake gun dies after being shot by Ohio police
Ukip mocked after mistaking Westminster Cathedral – for a mosque
Sarah Vine criticises lesbian mother Jack Monroe: 'If she was unsure about her sexuality, she should have taken greater precautions'
iJobs Money & Business
£Attractive Package: Citifocus Ltd: Prestigious asset management house seeks a...
£Negotiable: Citifocus Ltd: This is a varied role focusing on the firm's mutua...
£90000 - £140000 per annum + benefits: h2 Recruit Ltd: Are you a high achievin...
£25000 - £37000 per annum + benefits: h2 Recruit Ltd: Are you seeking to furth...