Rentokil swoops as BET bid battle nears climax

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The Independent Online
The pounds 2bn takeover battle for BET is poised for a nail-biting finish at the end of this week. Rentokil yesterday bought a 6.8 per cent stake in BET in a stock market raid, while the target itself won unexpected public support from several institutional investors.

Rentokil's pounds 130m share purchase, the first it has made during the course of the bid, was done at 202.5p a share - the same as the cash alternative.

Clive Thompson, chief executive of Rentokil, said the buying reflected confidence that the deal would go through. "It's a good purchase. We have bought from institutions who are not natural holders of Rentokil shares."

The bidder discounted suggestions that it had become nervous about the outcome of the bid just days before it is due to close on Friday. A spokesman said the move was in response to requests by institutional shareholders that wanted to sell.

But the BET defence bandwagon continued to roll yesterday as institutional investors holding 17.25 per cent of its equity said they would refuse the Rentokil offer. Prudential Portfolio Managers, holder of 5.26 per cent, Barclays de Zoete Wedd Investment Management with 2.91 per cent, and Hermes Investment Management, the old PosTel, with 1.57 per cent, all publicly aligned themselves with a jubilant BET camp. The latest recruits to the BET side follow the rejection of the bid last week by M&G Investment Management, the group's biggest shareholder with 7.5 per cent.

"It's gone from being a walk-over to being a very closely contested battle," said Nigel Utley, an analyst at the Greig Middleton broking firm.

A spokesman for BET said the company's chief executive, John Clark, had spoken to about three-quarters of its institutional investors.

"As can be seen from today's announcement, increasing numbers have the confidence to back him."

Andrew Skirton, chief executive of BZWIM, said they had taken some profits on BET shares a few weeks ago. He dismissed suggestions that they had taken the decision to support BET because BZW's stockbroking arm was advising the company.

He added: "We are acting independently of them. We took the decision to sell some stock to lighten a little. We were not convinced that Rentokil would do a better job than the BET management."

It is understood that Prudential's decision was based purely on the value of the offer. A source close to Prudential said: "It does boil down to the usual subjective judgement of value and at the end of the day we did not believe [Rentokil's offer] was a knock-out blow."

Mr Thompson was not concerned about the support announced yesterday by some of BET's main shareholders. He added that the decisions of the three institutions was very much as predicted, and both M&G's and Prudential's stance was to support existing management.

He pointed out that BZW had been selling stock recently. He also believed that BZW and Hermes could not sell their remaining holdings in BET because they were in funds indexed to the performance of the rest of the stock market. BET management again yesterday restated its claims to remain independent. The chief executive, John Clark, and the other executive directors said: "It is their [management's] intention to retain their financial commitment to the company, other than in exceptional circumstances, during this exciting growth period".

BET's shares added 4p to 205.5p yesterday, while Rentokil's put on 5.5p to 358.5p. At that level, the main shares-and-cash offer values BET at 215.3p per share.