Inchcape set to buy 81m pounds stake in Gestetner

INCHCAPE, the overseas trader, has agreed to buy up to 25 per cent of Gestetner for up to pounds 81m after three years of on-off negotiations with Chiltern, a company partly owned by Basil Sellers, the outgoing chairman of Gestetner.

The deal came off because Chiltern reduced its price. Charles Mackay, chief executive of Inchcape, said: 'Until now we have never seen eye-to- eye on price.'

Chiltern originally wanted pounds 3.50 a share, whereas Inchcape is paying pounds 1.29 for the initial 15.3 per cent stake.

The price fell in line with Gestetner's profits. Gestetner warned yesterday that next month it would report only a small interim profit before a pounds 45m charge to cover redundancies and write-downs. It made profits of pounds 27m on sales of pounds 900m in the year to 31 October.

The deal underlines the turbulent nature of the office equipment sector, which also saw a bid for Erskine House yesterday. It also brings Inchcape closer to Ricoh, the Japanese equipment supplier, which already owns 30 per cent of Gestetner.

Inchcape was asked if it wanted to launch a bid for the whole company, said David Gestetner, grandson of the founder and a non-executive director. But Mr Mackay said it had opted for a cautious approach.

As part of the deal Inchcape has bought an option to acquire some convertible loan stock from Chiltern for a further pounds 41m. If it converts the loan stock, Inchcape will own 25 per cent of Gestetner. Two of its directors are joining the office equipment company's board.

Mr Sellers, 58, who owns 20 per cent of Chiltern, is stepping down. He said last night: 'I will use the time to see more cricket, go to the races and ski.' Chiltern bought the shares in 1986 for an effective price of pounds 1.35 a share.

Inchcape's shares lost 8p to 583p on the news and Gestetner's income shares rose 7p to 130p. To pay for the initial part of the purchase, Inchcape is issuing shares at 570p to raise pounds 40.4m.

Once Mr Sellers told the rest of the Gestetner board that he was again in talks with Inchcape, the non-executive directors, including Sir Ronald Halstead, set up a committee to find out if anyone was prepared to bid for the whole company. Potential purchasers had backed out by the end of April.

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