Kvaerner near to agreed bid for Trafalgar

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The Independent Online

Kvaerner, the Norwegian shipping and engineering group, is close to making an agreed bid for Trafalgar House, the loss-making company, after bid talks made progress over the weekend.

Sources close to Trafalgar insisted yesterday it would agree to nothing less than a bid for the whole company. Kvaerner stressed that it was at no time under pressure to come up with a formal offer.

While neither side was prepared to say anything, City observers assumed the bid would be around the 50p-55p level, valuing Trafalgar at around pounds 900m.

Weekend press reports dwelt on Kvaerner's reluctance to take over Trafalgar's non engineering operations, particularly the loss-making Cunard cruise- shipping line. Cunard may not, however, be the stumbling block that some analysts have suggested, according to sources yesterday.

Potential buyers for Cunard suggested by City sources over the weekend included P&O, Disney, the American entertainment giant, and shipping companies Carnival and Royal Caribbean.

One analyst, however, described such speculation as "complete rubbish".

None of the names put forward were prepared to confirm that they were definitely interested, still less that they had been involved in any preliminary talks. A spokesman for Kvaerner denied that Cunard had become a stumbling block but admitted that it "did not fit with Kvaerner's core strategy".

Cunard lost pounds 134m last year out of a total loss for Trafalgar of pounds 321m. Its fleet is seen as under-invested and out of date, with last year's humiliating QE2 fiasco still fresh in people's minds.

Both companies' merchant- bank advisers continued intensive talks over the weekend - Brian Keelan of SBC Warburg for Kvaerner and John Reynolds of Schroders for Trafalgar.

It is understood that Kvaerner has been in close talks with HongKong Land, the Keswick-owned company which holds a key 26 cent in Trafalgar.

According to one source, the UK company is prepared to consider "nothing but a bid for the company. It is not in the interests of Trafalgar's shareholders for the company to be cherry-picked in any way whatever."

A spokesman for Kvaerner said that it was "still working on whether to go ahead with a bid". He stressed that there was no time pressure on Kvaerner to come up with an offer. "No one else is going to march in and buy this."

A spokesman for P&O said that while the company's chairman, Lord Sterling, had said last week that it "would be prepared to look at it [Cunard], at a price", this should not be interpreted to mean it was ready to make an offer.

"We haven't been approached by anyone. We would have to look pretty carefully at the price. But we wouldn't dismiss it out of hand. If we did make a bid we would have to increase Cunard's market share and cut costs."