NatWest also says that Browning, the US group, could increase its pounds 364m offer for the waste disposal company by 15 per cent before suffering earnings dilution.
Attwoods shares continue to trade above the bid price at 113p. And arguments circulating that the underlying share price is less than Browning's offer because of Attwoods' recently announced 3.75p net final dividend do not wash -the shares do not go ex- dividend until 19 December, a date which is beyond the 60-day timetable for the current bid.
NatWest does not expect Attwoods to retain its independence, but says 'our break-up valuation of 140p per share underlines just how low the Browning offer is.'
The report by Robert Miller- Bakewell and Paul Knight adds: 'In four out of six business segments Browning stands to make significant strategic gains if it can complete the deal.
'Further, 109p per share is a very cheap offer price. Browning can afford to pay up, and even in the absence of a counter-bid, looks likely to have to do so.'
NatWest also believes that Attwoods has more financial information in its armoury with which to defend itself against the 109p offer.
The broking house says that Attwoods' more upbeat trading statement could soon be followed by good trading news for the first quarter to the end of this month, and a possible bullish forecast for the half-year to January.
The NatWest report was one of the best talking points on a day when a promising start proved to be a false dawn for the market, which notched up another session of heavy losses among leading shares.
The FT-SE 100 share index, up by nearly 8 points soon after trading started, finished 24.5 points lower at 3,060.8 as investors continued to remain on the sidelines.
Making money from equity trading remained a tough challenge for dealers on a day when there were just 20,000 trades and volume trading of less than 596 million shares.
Such is the market's mood that all news appears to be bad. Yesterday was no exception, with economists and dealers at odds over the interpretation of the latest batch of figures for retail sales. Record retail sales were nothing to worry about, according to the City's army of economic scribblers.
Dealers, however, were concerned about the inflationary implications of consumers becoming reacquainted with the habit of opening their wallets and purses.
Worries about inflation were also detected on the gilts pitch, where the growing strength of the pound is also causing problems. Longer-dated government issues lost pounds 5 8 .
Bullion markets also lack any clear sense of direction. Gold rose dollars 1.25 to dollars 391 an ounce 'but underlying physical demand remains weak', said Ted Arnold, analyst at Merrill Lynch.
Among the top 100 equities, fallers outnumber gainers by three to one.
Internationals bore the brunt of the heavy mark- downs, mainly due to the movements on the foreign exchanges and, in several instances, to downgradings by analysts.
Even the lower reaches of the market, which had been making ground in recent sessions, beat a retreat. The FT-All Share index lost 0.9 per cent to 1,534.4.
Positive corporate news was thin on the ground, and what there was really only had an effect on individual stocks rather than having any more meaningful impression on a whole sector.
Smiths Industries, for instance, rose 7p to 447p on a better-than-expected 12 per cent rise in profits to pounds 117m. However, many other shares in the engineering, aerospace and defence quadrant finished the day at lower levels.
Booker's expansion in the salmon farming industry met with unfavourable reaction. The shares lost 7p to 413p, with analysts concerned about the volatility of wholesale prices for salmon, which are often at the mercy of Norway, which has a track record of dumping surplus stocks of fish.
SG Warburg's downgrading pen was brandished on its profit projections for Bowater, part of the FT-SE 100 index. Shares in Bowater, which is trying to expand its plastic packaging operations via the purchase of the UK arm of the South African Nampak group, lost 12p to 452p.
The 7.5 per cent convertible preference shares in National Home Loans are said to be catching the eye of speculators. There is some talk that news on a financial reconstruction is not too far off, which could clear the way for payment of arrears on the preference stock. Dividend arrears are said to amount to 23p per preference share, which are currently trading at 49p.
Whitchurch Group's aspirations to grow by acquisitions will move a step forward today. The shares, which have been dealt on a matched-bargain basis under rule 4.2 since February, will today move to the official list, making it easier to use its equity paper as currency. Shares were last traded at 54.5p, valuing the meat processor and distributor at slightly more than pounds 7m.
Leading share prices retreated further yesterday. The FT-SE 100 share index dropped by 24.5 points to 3,060.8 and the FT-SE 250 declined by 11.1 to 3,521.2. Equity trading, however, remained subdued, with fewer than 600 million shares changing hands.