Low bid deflates Brown Shipley

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BROWN Shipley shares fell sharply after the troubled investment management company revealed that a bid from Kredietbank SA Luxembourgeoise would be much lower than expected.

The Brown Shipley price, which had risen in the last few days on bid rumours, crashed 16p to 35p after the company said bid talks with Kredietbank, which already owns 29.8 per cent, revolved around a price of only 30p.

William Dacombe, Brown Shipley's chairman, said yesterday that he expected Kredietbank to make an offer imminently and that he did not anticipate any regulatory objections to the deal. He said he hoped the sale would be agreed by the end of next week.

Brown Shipley has pounds 2.4bn in discretionary funds under management, including pounds 600m in unit trusts.

The bid talk was triggered when Brown Shipley was notified by Kredietbank 'of circumstances which might give rise to claims arising out of indemnities given on the sale to KBL of Brown, Shipley & Co in respect of liabilities relating to the sale of Lease Management Services Limited. The total amount of these claims, if made, would be pounds 2.4m.'

Brown Shipley Holdings broke itself up last June after heavy losses and sold its City bank to Kredietbank for pounds 1.

Two other merchant banks were the subject of market speculation this week. It emerged on Thursday that Royal Bank of Scotland is set to announce the sale of its merchant bank, Charterhouse, in the next few days to BHF, a German bank, and Credit Commercial de France. There was renewed speculation yesterday that TSB will sell its merchant banking arm, Hill Samuel, also to a Continental buyer.