Hays sounds out pounds 1bn takeover of rival Salvesen

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The Independent Online
Hays Group, the distribution, personnel and document delivery company, has made a takeover approach for its 150-year-old transport rival, Christian Salvesen, that would value the company at around pounds 1bn.

Hays said yesterday it hoped it could achieve an agreed deal that would need the consent of the Salvesen family which controls 40 per cent of the shares. Christian Salvesen said the offer was unwelcome. However, Hays chief executive Ronnie Frost said he would not rule out "going hostile".

Analysts said the likely price-tag for Salvesen would be around 350p per share with some expecting the company to agree to the deal. "The company is aware of the need for consolidation in the sector," one analyst said.

If the deal went ahead it would make Hays, currently worth pounds 1.7bn, an FT-SE 100 company with a dominant position in the distribution sector.

Christian Salvesen shares soared from 289p to 349p while Hays' stock slipped back 26p to 414p. Hays said it had already held discussions with Christian Salvesen but was seeking further meetings. "We've been looking at the company for two years. This is not just a flash in the pan," Mr Frost said.

One problem is that Christian Salvesen chief executive Chris Masters is on holiday and is not scheduled to return until Sunday. A board meeting has been scheduled for next week to discuss the approach.

Hays said in March that it was looking for acquisitions. However, it was thought the targets might be in Europe as the company has been trying to reduce its dependence on the UK which still accounts for three-quarters of group sales.

Mr Frost said that Hays and Christian Salvesen would make a perfect fit with strong businesses but only two common clients. The main attraction is Christian Salvesen's European distribution business which it has been building up.

Hays has been a strong performer on the stock market since it went public in 1989. Floated at 100p, the shares have quadrupled in seven years

The company has developed a three-legged structure based on distribution, commercial services such as document delivery and personnel. While many of its rivals, including Christian Salvesen, have found their distribution businesses squeezed by the supermarket groups, Hays has only two supermarket clients, Tesco and Waitrose.

Christian Salvesen grew out of a whaling and timber business and is still a family dominated company. But it has found the going tough recently and its shares have performed poorly.

Chief executive Mr Masters has been re-structuring the group for six years, during which he has sold a raft of businesses.

Its core businesses are distribution where its main clients are Sainsbury and M&S and Aggreko, the power generation and control division which ran into problems in 1994. From the peak that year of 400p the shares have since tumbled to around the 300p mark.

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