Kvaerner ponders legal action against Amec

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Kvaerner yesterday raised the possibility of legal action against the board of Amec after the Takeover Panel attacked its former public relations advisers for breach of City bid rules. The Stock Exchange is already probing trading deals.

Kvaerner, bidding pounds 360m for Amec, said in a statement through its merchant bankers, SBC Warburg, that there were "serious questions" arising from the Panel's ruling, including whether an attempt had been made to create a false market in Amec shares.

Erik Tonseth, president and chief executive of the Norwegian group, said: "We have asked our solicitors to make clear to the current board of Amec that Kvaerner reserves its rights on these matters; we believe that the Panel statement may be but the first chapter in a grim saga."

The move comes just days before the final closing date of the bid on Monday and follows Tuesday's heavy censure by the Panel of Amec's public relations advisers, Financial Dynamics.

The Panel said that a director of Financial Dynamics had made certain comments relating to profits levels of Amec for 1996. The information was not public knowledge. The director is believed to be FD's chairman, Mr Tony Knox.

The profits statement and other unpublished matters relevant to Amec's defence strategy were allegedly passed to an unnamed analyst from a stockbroking firm.

It is thought that a representative from Merrill Lynch was involved and that the telephone conversation was tape-recorded.

Press reports over the weekend of 2 and 3 December had already prompted the Panel to call for written confirmation from Amec and Financial Dynamics that no such information had been supplied to third parties.

Further investigations by the Panel established that there had been such conversations. It ruled that Financial Dynamics had failed to take sufficient care in talking to analysts, "which resulted in serious breaches of the [Takeover] Code".

Financial Dynamics were immediately replaced as PR advisers by rivals Dewe Rogerson following the decision.

Kvaerner yesterday called on Amec shareholders to disregard what it described as these "rumours of future profits". The company is understood to be considering whether it could take civil action against the Amec board in the event that the bid fails.

The Norwegian group yesterday bought a further 0.9 per cent of Amec's shares, taking Kvaerner's total holding to 23.4 per cent.

It is thought that the outcome of the bid will turn on the decision of small shareholders, who own around a fifth of the equity, and PDFM, the fund manager which speaks for 14 per cent. The Amec management is thought to be holding a meeting with PDFM tomorrow.

Amec shares fell 1p to 99p yesterday, which compares with the 100p cash being offered by Kvaerner.

Because of the large number of convertible preference shares in issue, the Norwegians will need to own or receive acceptances covering 54 per cent of the equity by Monday to clinch the bid.