Loewen emerges as the white knight: Canadians confirm Great Southern approach

LOEWEN, the Canadian funeral group, emerged yesterday as the white knight in the struggle for control of Great Southern, the British burial business.

It is understood that Great Southern approached the Canadians on Tuesday after SCI, the Texan business which launched a bid in June, moved into the market and picked up almost a fifth of its shares.

The news came after the Takeover Panel bowed to pressure from SCI to freeze the bid timetable. The panel agreed that the announcement of an approach from a third party had inflated Great Southern's share price and pushed it out of the reach of SCI.

It is thought that Loewen was put under pressure by the Vancouver Stock Exchange to clarify its position after market rumours that it was one of two possible bidders for Great Southern.

Loewen said it was talking with Great Southern and the Field family, which owns 56 per cent of the company through JD Field, a private company. It confirmed that it had been asked to make an offer.

The intervention of Loewen looks likely to start a bidding auction between two highly acquisitive North American groups that are both trying to buy a launching pad for a significant UK presence.

The price each side is prepared to pay is likely to depend on its ability to consolidate Great Southern in its own accounts for tax purposes. Without 75 per cent control problems could arise in deducting interest payments before the calculation of tax.

With SCI holding 30 per cent of Great Southern's diluted equity, it is potentially able to pay more than Loewen and sources believe it would try to trump a rival bid.

Like SCI, Loewen has spent heavily on acquisitions. It is believed to have invested more than dollars 100m expanding in the fragmented North American funeral market.