Rentokil set to raise BET bid
Thursday 11 April 1996
Rentokil is today expected to raise its pounds 1.9bn bid for rival business services group BET by between 10p and 15p a share, in what analysts believe will be a knockout blow.
The pest control group met key BET institutional shareholders this week and was told that the rise would be enough to secure their acceptance.
Rentokil's shares dipped 5p to 363p yesterday in anticipation of increased terms, which have to be announced by tomorrow under takeover rules.
At the current share price, the existing offer of nine new shares plus 800p in cash for every 20 in BET values the latter at just over 203p. BET's shares are now well clear of those terms, even after yesterday's 0.5p fall left them at 207.5p.
The expectation that the increased terms will be announced a day ahead of the final deadline is likely to reflect Rentokil's need to organise underwriters for a higher cash element to the offer. However, observers suggested that more cash did not preclude an increase in the share element as well.
One big institutional shareholder in BET said: "If there was an additional 10p to 15p on offer a betting man would say they [Rentokil] would win it." Another institutional holder of Rentokil said: "I think they will clinch it with a little bit more, but I wouldn't like to see much more than 10p."
Charles Pick, an analyst with Panmure Gordon, said: "I don't think they can afford not to raise it. There have been quite a few cases when just that little bit extra would have done it."
He suggested an offer increased to 215p to 218p, giving an exit price- earnings ratio of around 16.5 on his forecast earnings of 13p for the current year, "would probably just about be enough to clinch it".
Both sides to the bid have been conducting a feverish round of visits to City shareholders this week, although at least one of the key institutions is not being seen until next week. It is thought that Rentokil will want to be able to come to that meeting with its final terms on the table.
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