Mystery suitor makes Peterhouse approach

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The Independent Online

Peterhouse, the engineer which turned itself into a rail maintenance company just a year before Network Rail said it would take all such work in-house, said yesterday that it has received a bid approach.

The company owns First Engineering, the Glasgow rail maintenance group, half of whose turnover will be wiped out when Network Rail, the not-for-profit organisation which runs Britain's railways, takes over maintenance work around the middle of this year. Three contracts with Network Rail are to be scrapped.

Peterhouse shares, which have been ticking up in recent trading sessions, climbed a further 13 per cent to 197p on the news, valuing the company at £95m. They bottomed out at 102p last November.

Sector observers said they were mystified as to the identity of the bidder and several of the rail industry's biggest contractors privately ruled themselves out of the frame.

One analyst said: "My guess is that, while it is possible the bidder is from the quoted sector, it will be seen as too risky. The big question is whether the rail side will have any customers left. So a bid could come from the private sector or it could be a financial, break-up bid."

In a brief statement, the Yorkshire-based group said it "has received a preliminary approach that may or may not lead to an offer". It added: "The board is considering this approach and will make a further announcement in due course."

Peterhouse shares have languished since the Network Rail decision last October, which came on the heels of a major profit warning at the company. Its business laying steel tracks across boggy land - for events such as open air concerts or for infrastructure maintenance work in hard-to-reach places - had suffered because of the unusually dry summer.

The company's non-rail businesses provide support services to the telecoms operators and the National Grid. Analysts expect profit for 2003 of £11.2m, down from £16.7m the year before.

David Jackson, the executive chairman, sold 285,000 shares at 280p before the disasters, in June. The sale leaves him with 1.2 million shares in the company, a 2.5 per cent stake.

A takeover at the current price would mark the end of an ambition to turn Peterhouse into a significant player in infrastructure maintenance. Mr Jackson sold the group's construction business in 2002 and bought First Engineering for £65m.

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