Ladbroke bid speculation grows

DAVID HELLIER

Ladbroke, the betting shops and Hilton hotels group, was at the centre of renewed and intense takeover speculation yesterday as shares in the group continued their almost relentless rise on large trading volumes.

The shares, which were valued at 169p at the beginning of the month, rose to 190.5p yesterday, up 10.5p on the day on speculation that the group was vulnerable to a bid. More than 20 million shares were traded in Ladbroke, with dealers reporting strong interest reported from US buyers.

One analyst, who declined to be named, said: "I would not be surprised to see a bid. It would be a very logical move for one or two groups to make." Ladbroke is valued at pounds 2.2bn on last night's closing share price.

John Jackson, Ladbroke's chairman, said yesterday that the group was "obviously trying to find out the buyers of its shares."

He said: "We are relying on our brokers to keep us informed," adding that "nobody has been talking to us." He also said that he did not have "the slightest indication of interest from anybody."

When the bid rumours first began in November chief executive Peter George, who was then in the US on business, was booked on a Concorde flight to get him back home to London speedily should a bid emerge.

Previous market rumour has mentioned the brewers Bass and Whitbread, which are both keen to increase their hotel interests, as possible buyers.

Most of yesterday's excitement, however, was also caused by speculation that the Hilton Hotels Corporation of the US might also try to make a move to give it the non-US Hilton hotels that are currently owned by Ladbroke.

The Hilton speculation followed news of a research note being put out by a Morgan Stanley analyst, Neil Barsky, about Hilton Hotels Corporation based on a conversation he had with the new and the first non-family Hilton president and chief executive officer, Steven Bollenbach.

According to UK analysts, Mr Bollenbach confided to Mr Barsky that he believed the Hilton group had made a crucial mistake a decade ago when it sold the non-US rights to the Hilton chain to Ladbroke. He is reported to have said that he regarded the Hilton brand name as the group's main asset and that in the future the group's strategy would be far more aggressive.

Since Mr Bollenbach's arrival earlier this month Hilton's share price has risen 26 per cent, to take the company's valuation to $3.5bn and putting it in a strong position to make a big acquisition.

Mr Barsky was unavailable for comment yesterday and a spokesperson at his office said his research note was for internal purposes only.

Ladbroke itself awaits the presentation to the City of its annual results at the beginning of next week. The group's betting business has been adversely affected by the National Lottery and analysts are expecting profits of around pounds 120m-pounds 125m, compared with pounds 128.5m last time.