Leather goods firm becomes takeover vehicle, share price soars

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The Independent Online

Amid the usual flock of high-flying technology shares, a small leather goods business has emerged as one of the hottest stocks in Britain.

Amid the usual flock of high-flying technology shares, a small leather goods business has emerged as one of the hottest stocks in Britain.

Shares in the Knutsford Group continued their relentless surge Thursday, shooting up 60 percent on the heels of a meteoric 1,500 percent rise the day before. But the excitement has more to do with corporate takeovers than cow hides.

Interest in Knutsford exploded after it announced Tuesday that it would buy out an investment firm called Maybeat Ltd., in what financial authorities are calling a reverse takeover.

Knutsford said it was looking to grow by acquiring other businesses, and Maybeat's directors said they would draw on their experience in the retail, property and leisure sectors to pinpoint future takeover targets for Knutsford. They would serve as directors on Knutsford's board, and Maybeat would become the enlarged group's operational company.

The announcement led to widespread speculation that some of Britain's best-known - and underperforming - retail companies might become targets. Among those mentioned have been department store chain Marks-and-Spencer PLC and supermarket companies J. Sainsbury PLC and Safeway PLC.

As a result, Knutsford shares closed higher Thursday at 240 pence (dlrs 3.96) per share, compared to Wednesday's close of 150 pence (dlrs 2.48). Knutsford shares were trading at just 9.25 pence (15 cents) each before the deal was announced.

The deal would give privately-owned Maybeat access to a potentially vast source of funds; Knutsford is listed on London's Alternative Investment Market, a part of the London Stock Exchange.

One of Maybeat's directors is Archie Norman, chairman of the British supermarket chain Asda Group PLC, which agreed to be bought out in June by Wal-Mart Stores Inc. for dlrs 10.7 million.

Norman's three partners are Julian Richer, founder of a chain of stereo stores - Richer Sounds - and Nigel Wray and Nicholas Leslau, property specialists whose Burford property group built the Trocadero retail complex at Leicester Square in central London.

The four would hold a 90 percent stake in Knutsford if Maybeat's shareholders approve the combination.

Knutsford, based in Manchester in central Britain, plans to issue almost 248 million new shares to acquire Maybeat. The enlarged group would have 5.4 million pounds (dlrs 9 million) in cash.

Knutsford is a holding company with a wholly-owned subsidiary that designs and sources leather clothing.

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