Laporte set to join in battle for Evode

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The Independent Online
THE MARKET shrugged off reports of higher debt at Evode yesterday as it anticipated an imminent bid from Laporte for the maker of Evo-stick.

It is understood that information passed to Wassall, the mini- conglomerate with a bid already on the table, showed Evode's debt averaging more than pounds 40m this year, against the pounds 28.5m reported by the company at its year-end last October.

Evode dismissed the report as nonsense, and said it expected debt to finish the year close to last year's figure. Observers of the bid said it was an attempt to put pressure on Laporte by increasing investor resistance.

In a day awash with rumours - among them that Burmah might enter the battle - Laporte's shares closed 3p lower at 610p, having fallen to 607p earlier. The company has been seeing institutional investors to explain the logic behind its interest in Evode.

Laporte has committed itself to not making a bid if it believes the acquisition will dilute earnings or damage the balance sheet.

Martin Evans, chemicals analyst at Hoare Govett, said he calculated that a Laporte bid at pounds 1 or slightly more would be acceptable, as its effect on earnings would be broadly neutral if not slightly enhancing.

He was very sceptical about wilder speculation that Laporte would offer as much as 120p.

Laporte announced on Tuesday that it was holding talks with the gluemaker, minutes after Wassall increased its hostile bid to 95p.

'I belive that if Laporte bids, it will probably get Evode,' Mr Evans said. 'Although the earnings multiples look high, Evode is a quality manufacturing business.' But it had enormous debts out of which it would find it difficult to trade. 'Buying it at the bottom of the cycle could look like a very shrewd move in the future.'