Lucas bid expected in next few days

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The Independent Online
Lucas Industries, the car components and aerospace group, could be on the end of a hostile pounds 2.5bn bid within days, market makers were speculating last night.

Takeover rumours have gathered pace following the group's confirmation that it is in merger talks with the US brakes and diesel engine group Varity.

Dealers believe these talks will fail and that a rival bid will be tabled. Suitors being mentioned yesterday include General Motors, the world's biggest car company, TI, Siemens of Germany, and fellow UK automotive componet groups GKN and T&N.

Shares in Lucas rose 11p yesterday to 234p valuing the group at pounds 1.95bn. However, dealers were speculating that any bid would have to be pitched at 260p-275p a share putting a price tag of pounds 2.3bn to pounds 2.4bn on the company.

Lucas has been vulnerable to a bid since its chief executive George Simpson confirmed two months ago that he is leaving to take over from Lord Weinstock at GEC.

Mr Simpson is on record as believing that the car components industry will be dominated by a handful of large players and that to survive Lucas would have to grow much bigger.

It considered forging an alliance with the French component supplier Valeo by buying Carlo de Benedetti's 30 per cent stake in the business but rejected the idea in favour of talks with Varity, which owns the diesel engine manufacturer Perkins and is the US's biggest brake manufacturer.

Market report, page 20