The icemen cometh in takeover battle for Bridgewell

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The Independent Online

Kaupthing, the Icelandic bank, has jumped to the front of a pack of bidders for Bridgewell Securities, the City investment bank and stockbroker.

The struggling British firm admitted last week it had received several approaches. Rothschild, its adviser, has been fielding the offers but a formal auction has not begun. Bridgewell is understood to be open to offers of at least 140p, which would value it at £60m - the price at which it floated last summer. The shares have traded below that level since then.

Kaupthing is keen to increase its presence in the UK brokerage sector. The bank, which owns London-based broker Singer & Friedlander, poached the former chief executive of rival outfit KBC Peel Hunt, Tim Cockroft, last November. It has made unsuccessful bids for rivals Numis Securities and Teather & Greenwood in the past.

Bridgewell is vulnerable. It reported a drop in underlying profit from £3.4m to £1m last year as fewer companies chose to float on the stock market. The company also had to increase salaries to keep its staff. Jim Renwick recently came on to replace its chief executive, Rennie McConnochie.

Since Bridgewell released its statement, Rothschild is understood to have received several more expressions of interest. The broker's list of more than 80 corporate clients - including UK Coal, Aberdeen Asset Management and GCap Media - is thought to be a key attraction. The shares rose 17 per cent last week on the news it was in play.

Market experts have long predicted a wave of consolidation in the overcrowded UK brokerage sector. But full-blown mergers don't tend to happen as rival firms prefer to poach key people rather than integrate an entire organisation. Canaccord Capital of Canada, which is also thought to have talked to Bridgewell, recently hired several bankers from rival Panmure Gordon. And several firms are understood to have approached the corporate clients of ABN Amro to take advantage of the uncertainty created by its possible takeover by Barclays.

A takeover of Bridgewell is complicated by its capital structure; it has five different classes of shares. That and a value-to- ebitda (earnings before interest, tax, depreciation and amortisation) ratio of 13.5 - nearly twice that of stronger rivals such as Evolution Securities and Numis - have put some bidders off.

Some potential suitors are thought to have ruled themselves out, including Evolution, Teather & Greenwood and American bank Jefferies. Cenkos is also understood to have no interest.

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