Hongkong Land snaps up 14.9% of Trafalgar House

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The Independent Online
HONGKONG Land, the property company that is part of the Jardine Matheson group, yesterday snapped up 14.9 per cent of Trafalgar House, the Ritz hotels to housebuilding conglomerate, in a dawn raid and launched a tender offer for a further 15 per cent of the shares.

Hongkong said it wanted to remain a minority shareholder with a 'substantial long-term strategic' stake in Trafalgar. It ruled out a full bid for at least 12 months unless there was a 'material change of circumstances' such as a bid or rival tender offer. But it said it would ask for representation on Trafalgar's board.

Trafalgar attacked the raid as 'totally opportunistic' and said that the 85p offered by Hongkong 'does not reflect the underlying net worth and prospects of Trafalgar House'.

Sir Eric Parker, chief executive, said: 'To allow Hongkong Land to get to 30 per cent on a long- term basis is not in the interests of the majority of shareholders,' and accused Hongkong of 'trying to get partial control without paying a bid premium'.

Trafalgar shares have plunged from a high of 165p to a low of 39p this year as investors worried about its property exposure, its high borrowings and its accounting methods.

Sentiment has also been hit by last year's acquisition of Davy, the construction business, which is still caught up in disputes and which has proved an unexpected drain on cash. Some shareholders have been pressing for Sir Eric and Nigel Broackes, the founder and chairman, to go.

Yesterday, Trafalgar's shares soared when it became known that SG Warburg was offering 85p for each ordinary share and 82p for the 'A' shares, which carry a scrip dividend. The shares closed up 29p at 89.5p.

Hongkong Land is one of the largest property companies on the island, owning five million square feet of property in the business district. At the end of 1989, its investment property portfolio was worth dollars 4.6bn ( pounds 2.6bn). Its managing director is Alasdair Morrison, who was in London yesterday.

A third of its shares are owned by Jardine Matheson, the Hong Kong-based trading group whose interests include a 25 per cent stake in Kwik Save, the discount retail chain, a joint venture with Robert Fleming, the merchant bank, the Mandarin Oriental hotel chain and an insurance broking business.

Jardine's strategy has been to take minority stakes in companies while injecting the group's management into them.