M&G throws BET a lifeline by rejecting Rentokil offer
Saturday 20 April 1996
M&G is thought to have already attempted to broker an agreed deal between the two sides. In a letter to Sir Christopher Harding, BET chairman, the fund management group praised chief executive John Clark's success over the past few years in rescuing BET from its "parlous" state in 1991.
"Some commentators regard the `rescue' aspect of managing poorly performing companies as a comparatively easy part of the job. John has not only accomplished this most successfully, but has also been consistent in setting out his plans for the future and is delivering results in line with these strategies.
"We see his future involvement at BET as a key issue and were reassured to hear at the meeting he intends to stay with the company for some time."
M&G "has little difficulty in supporting the board of BET and will, therefore, not be accepting the current bid from Rentokil."
Nigel Morrison, an M&G fund manager, said Rentokil's bid was too low. "We have a high regard for Rentokil's management, but unfortunately they were not prepared to pay quite enough."
Rentokil was quick to downplay the M&G move. Charles Grimaldi, director of corporate affairs, said: "As far as we know, historically they always support the existing management."
Some City fund managers agreed that M&G's stance was no surprise. One said: "It is very much M&G's style. It is very much their public attitude to hostile takeovers [to support incumbent managements], so I don't think you will find anyone anywhere remotely surprised by their attitude."
But others pointed to the unusually public nature of M&G's support for the BET management. One large shareholder in the group who did not want to be named said: "I was surprised by the strength of M&G's public view on this. I thought [the bid] was dying a death and I think this will make people take a long and hard look at this. I think [the outcome] is finely balanced now."
A supporter of the BET management, he said he sympathised with the sentiments expressed by M&G. The bid had misrepresented the situation concering BET. "It has been portrayed as a lame duck company, which would have been accurate some years ago, but is pretty wide of the mark now." Mr Clark had a coherent strategy and had salvaged quite a bit of shareholder value over the past three years, he said.
Another big institutional shareholder which has not yet made up its mind about the bid agreed that Rentokil had by no means won the day. "It looks quite close. Thompson is a man with a record which looks quite good, but Clark's got a case. It's one of those cases where one has to think quite hard."
BET's shares fell 3p to 202.5p, 10p below the value implied by Rentokil's offer after the bidder's shares also dipped 3p to 352p yesterday.
Analysts said the latest development would strengthen the hand of Mr Clark, who is in the midst of a round of institutional visits. A spokesman said he still had to see about a third of the shareholders.
However, many observers still believethat Rentokil will win the day as institutions continue to bale out of BET.
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