Judge refuses to block GUS's American bid
Saturday 28 March 1998
The court ruling came after the battle for Metromail looked like turning into an auction with both GUS and ABI increasing their offers.
GUS started the process when it increased its bid from $31.50 to $34.50 per share, valuing Metromail at $888m (pounds 540m). This was immediately trumped by ABI, which said it was prepared to offer "at least" $34.75 for the business.
However, GUS's increased offer had the backing of the directors and RR Donnelly, a printing group which owns a 38 per cent stake.
ABI asked a judge in Delaware to issue an injunction against the proposed deal between GUS and Metromail.
After a three hour hearing, the judge at Delaware Chancery Court denied the request, saying: "I'm concerned that there is a risk GUS may abandon the deal."
If ABI does decide to appeal against the decision, the Delaware Supreme Court could hold a hearing as early as Monday. ABI could also come back with a last-minute higher bid.
The contest had degenerated into a welter of legal wrangling. ABI sued GUS, claiming it had attempted to prevent a fair auction for the business from taking place. GUS responded with its own writ claiming ABI had no right to interfere.
Analysts said the complications were not ideal for GUS as the company is also embroiled in a pounds 1.6bn hostile bid for Argos.
Ashley Thomas at SG Securities said: "GUS won't want to look like it is getting into a bidding war. But at these levels the difference is not significant in terms of the size of GUS. People might be concerned if they paid more than $37."
Mr Thomas said the implications for the Argos deal were unclear. "At 570p (the price of the GUS bid) Argos is more attractive because it is not the kind of opportunity that is going to come along very often. Whereas there are a variety of information services companies in the US."
Other analysts said it was more important for GUS to build its information services business and that Argos was not a "must have" deal.
GUS is keen to complete the Metromail deal as the business would be a neat fit with its Direct Technology Group in Illinois which it acquired last year.
GUS shares fell 9p to 772p yesterday as the US court decision was awaited. Argos shares rose 2p to 622p.
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