Investors go nuts over the Knutsford 'dream team'

NEWS ANALYSIS: Forget M&S. Archie Norman is more likely to have Storehouse in his sights
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The Independent Online
EVEN IN the cold light of day, Archie Norman's gang of four did not lose their Midas touch. After an epic day's trading on Wednesday which left analysts gawping at the "crazy" value being placed on Archie's latest venture, shares in Knutsford, the obscure leather company that has been earmarked as an acquisition vehicle for the now very famous four, continued their ascent. Yesterday's closing price of 240p, the highest of the day, was 90p up on Wednesday's already startling close.

The story so far: Mr Norman, aka Asda chairman aka Tory MP for Tunbridge Wells, clubbed together with Nick Leslau and Nigel Wray, the property entrepreneurs, and Julian Richer, the founder of Richer Sounds, to form a private company catchily known as Maybeat. On Tuesday, they announced their intention to pool pounds 4.95m to take a 90 per cent stake in Knutsford, moulding it as a shell through a complex reverse takeover agreement.

The result has been a level of hysteria which can only be equated to the heights of Beatlemania. "Archie's going to buy Marks & Sparks," people cried. "He's got Storehouse and Sainsbury on his shopping list."

Other alleged targets of our hero's golden gaze are Allders, House of Fraser and Debenhams. And stories have abounded that Mr Norman has already banked a cool pounds 38m, even though the price set on Knutsford is only theoretical - the acquisition of Maybeat has yet to be closed and, more importantly, the extra 247.5 million Knutsford shares for which Mr Norman and his cohorts will pay a paltry 2p, have yet to be issued.

Judging by their reaction on Wednesday, when the "dream team" attempted to dampen the wild enthusiasm by announcing that: "No specific acquisition target has yet been identified", the men were flattered but also shaken by the attention. All four made themselves scarce yesterday. And their spokesman was keen to play down expectations. He said: "Looking at it sensibly, this is four people getting together in a shell company and putting in pounds 5m." But he added: "Obviously, this is an interesting cocktail of strong, successful people, that is why they decided to get together.... But we expect things to settle down to a more realistic valuation."

Could the man who persuaded the US giant Wal-Mart to pay pounds 6.7bn for the humble Asda chain finally have bitten off more than he can chew? One analyst said: "I'm sure the market would love Archie to run Marks & Spencer. But Marks is not a straight asset strip. These guys will be looking for something valued at a discount to its assets such as Storehouse or House of Fraser." Maybeat's spokesman said: "These guys won't be limited by size. Their first deal will not be a pounds 20m affair."

But the undoubted winner is Mike Edelson, Knutsford's chairman, who owns 6.6 million of the group's 27.5 million shares. He has seen his holding soar in real terms. You can be sure that he will be shopping at Asda.