Merrill may press ahead with offer

SNC battle: Talks with Sir Evelyn 'inconclusive' l
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The Independent Online
DAVID HELLIER

and JOHN EISENHAMMER

Merrill Lynch, the US investment bank, is seriously contemplating pressing ahead with a pounds 500m takeover bid for Smith New Court, the stockbroker, even without the prior approval of NM Rothschild, Smith's largest shareholder.

Merrill, which is considered the favourite bidder so far for Smith New Court , had hoped last week that it would win an early indication from Sir Evelyn de Rothschild, chairman of NM Rothschild, that he would be prepared to accept an offer of at least 550p a share.

Relations between Smith New Court and its largest shareholder, however, have been strained as a result of SNC announcing last week that it was in talks with possible bidders before it had consulted in full with Sir Evelyn.

The Independent was told last week that a meeting had been set up between Sir Evelyn and Michael Marks, SNC's chairman, for last Friday but that this was postponed at the last minute. Yesterday, SNC sources said no such meeting had been planned. They added that a meeting took place yesterday but it was not decisive.

The meeting was nonetheless the first between Mr Marks and Sir Evelyn since Smith New Court made its announcement last week about its intention to speak to possible bidders.

One source close to the talks said: "It seems clear that all these negotiations will take longer than we had first hoped."

In the stock market, shares in SNC put on 10p to 526p as dealers speculated on a bid battle developing, perhaps with other interested parties joining the talks. So far only Commerzbank, which held talks with SNC and its advisers, Phoenix Securities, over the weekend, has said formally that it is interested in bidding for SNC.

Sources close to the German bank said it remained very much in the frame following the weekend discussions at which it is believed to have outlined its strategy for integrating SNC to its executive committee.

Merrill Lynch, in spite of having about 50 executives in London for the negotiations, has yet to make a formal announcement of its interest.

NM Rothschild's view appears to be that it is not in a hurry to sell out to the first bidder and that it should discuss the possibility of selling its stake to any of the other US and European financial organisations that are believed to be interested in adding the name of SNC to their plans.

Sources close to NM Rothschild have also indicated that, with little progress being made in talks between SNC and Sir Evelyn, that Sir Evelyn is interested in talking directly to possible bidders.

One source said that a bid tabled without prior approval from Sir Evelyn would at least "put the heat on him" to make up his mind what to do with his stake.

"Clearly, if the market deemed the offer to be high enough and the other shareholders were willing,he would be under real pressure to accept."

Merrill Lynch appears to have decided not to contact Sir Evelyn direct.

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