MB Caradon sale triggers bid alert: CarnaudMetalbox stake raises pounds 473m

THE building sector went on bid alert yesterday after MB Caradon, the Twyfords bathroom and Stelrad boilers group, raised pounds 473m cash from the sale of its 25 per cent stake in CarnaudMetalbox, the Anglo- French packaging company.

The sale to a French consortium has sparked intense speculation that MB Caradon is poised to make a big UK acquisition. The move will leave MB with net cash balances of about pounds 400m. By drawing on its existing borrowing facilities, it could boost its war chest to about pounds 800m, putting it in a strong position to negotiate an agreed offer.

Malcolm Brown, of James Capel, said: 'In terms of size, the list of targets is very varied but the company is more likely to go for a medium-sized acquisition, which would be more manageable. Larger companies would involve a greater degree of risk. Although MB's management has done very well, it is fairly cautious.'

Potential targets are Hepworths, Marley and Norcros, although the list of possible candidates is much longer, including Rugby and Redland.

Market speculation pushed shares in Hepworth 10p higher to 340p, valuing it at about pounds 650m. Marley rose 2p to 124p while Norcros was unchanged at 158p.

Peter Jansen, MB's chief executive, said that the company did not have 'any major acquisitions in mind at present' but would be well-placed to take advantage of improving prospects in the UK economy.

Although the company has a strong position in branded products, any takeover is likely to broaden its activities into other building materials sectors where its skills in cost-cutting could be applied.

Part of the stake has been sold to CGIP, the French industrial group, which is increasing its interest by 7 per cent to 32 per cent. Parfinance, a French financial group, will also take 6 per cent while SG Warburg has placed the remaining 12.3 per cent with institutional investors.

MB is due to report full-year results to 31 December on Monday. Analysts expect taxable profits to jump from pounds 106.4m to pounds 123m.