Govett wilts under US counter-attack
Tuesday 14 February 1995
The flow to the backwater 4.2 share market gathers strength. Latest is Floral Street, through the Exeter stockbroker Christows. One million shares are being placed at 150p. The proceeds will be used for acquisitions and to cut borrowings. FS makes point-of-sale materials and supplies graphic materials to media businesses.
Memory Corporation, the computer group, is set for an astonishing run, according to Richard Lucas at the stockbroker Henry Cooke, Lumsden. He believes the start-up group will make a profit of £3.9m this year; £20m next and £37m in 1997. The shares have romped ahead since Henry Cooke placed them on the 4.2 market and are around 120p.
Shares of the Govett fund management group tumbled to a new 12- month low as its US adversaries widened their dispute. Last week the Americans put Govett under pressure when they launched a lawsuit claiming $20m for what they alleged was fraud, negligence and professional malpractice.
Govett, not surprisingly, responded with a strong attack that has now prompted the Americans to complain about "misleading and inaccurate statements" and institute a claim for libel.
Govett shares fell 38p when the US confrontation first emerged. Yesterday they lost a further 22p to 286p. The dispute is with the directors of the $75m Govett Endeavour Fund, which produced a string of allegations and sacked Govett as its fund manager.
Govett is a highly regarded London fund manager. In the past year, as its investment acumen attracted increasing attention, the shares surged to a peak of 465p.
Only days before the US assault Govett said it was planning a fivefold increase in its funds under management by buying Duff & Phelps, a US fund business. The deal is seen as propelling Govett into the top league of British and US fund managers. With Duff & Phelps, Govett was thought to have acquired the muscle to win management contracts in the US. Govett has claimed GEF started its lawsuit to disrupt the Duff & Phelps acquisition.
As Govett wilted under the US campaign, the City's top financial share, SG Warburg, fell 20p to 706p on the departure of its chief executive, Lord Cairns. With a profit warning also taking its toll Warburg shares would have suffered a much steeper, more humiliating fall if takeover support had not come to their rescue.
Its talks with Morgan Stanley, the US investment house, preceded the present crisis, which came to a head last week following the defections of two high flyers to Morgan Grenfell. JP Morgan, as well as MS, are regarded as the most likely candidates to strike, although a defensive merger with a group such as Barclays de Zoete Wedd could offer the salvation of continuing British ownership without damaging the bank's international ambitions.
It was the takeover speculation that dragged the shares from their day's low of 693p.
The market had an uncertain day, weighed down by inflation and interest rate fears, reignited by January's producer prices data. The FT-SE 100 index lost 28.8 points to 3,081.1 in subdued trading. The growing Tory disarray over Europe hit government stocks, which suffered falls of a point among longer maturities.
The rest of the company news failed to offer inspiration. Besides the Warburg despair the market had to contend with more departures from Kingfisher, down 3p at 426p, and an unfavourable ruling for Saatchi & Saatchi, off 5p at 107p.
And, despite Friday's late upsurge, the widely-rumoured bid for United Biscuits failed, to the surprise of few observers, to materialise. But bulls of the shares are not too dismayed.
They pointed to the high level of share trading and, considering the sogginess of the market, the relative resilience of the shares. The price crumbled 19p to 346p with Seaq putting volume near 6 million. An early trade of 50,000 shares at 370p encapsulated the feelings of the bulls.
Hazlewood Foods is regarded as the next takeover victim. The shares have attracted active trading recently but shaded to 114p. Unigate remains the name in the frame. Automated Securities was another weak performer as talks with its bankers continued. The shares ended 12p lower at 62p.
Tibbett & Brittan, the transport group, continued to retreat following a James Capel downgrade. The shares fell 40p to 613p. Eurotunnel's trading performance left the shares another 6p down to 292p. British Petroleum, figures today, firmed to 426p. Sears, the retailing group, was another firm performer closing at 104.5p. There was talk of cutbacks in its leisure and sport retailing chain.
Mirror Group Newspapers rose 1.5p to 139.5p on the Maxwell pension settlement. Pearson, buying 10 per cent of a Hong Kong television business for £108m, lost 9p to 584p.
Bath Press made an active start, ballooning the day's volume. The old shares traded at 13.5p and the nil-paid shares at 3.5p. Seaq put nil-paid share volume at nearly 84 million with more than 7 million old shares traded. Eurovein, the engineer, emerged as the latest new issue flop. A profit warning sent the shares tumbling 51p to 86p. They were floated at 141p in November. The surprise bid from Misys for ACT lifted the target 30.5p to 107p but Misys fell 49p to 360p.
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