Rentokil walks off with pounds 2bn BET prize

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Rentokil yesterday won its pounds 2bn bid for BET to create the largest business services group in the world, but by a much narrower margin of victory than was predicted at the outset when it was thought that the bid would be a walk-over. Rentokil gained acceptances from holders of 59.8 per cent of BET shares.

Although a statement on the outcome was not released until after the market closed, expectations of success for the bidder sent BET's shares 16p higher at 219p, while Rentokil's shares were 26p up at 386p. That valued the cash and shares offer at 227.7p.

The news was accompanied by the announcement of preliminary results from BET, led by chief executive John Clark, which revealed that it had spent pounds 24m defending itself from Rentokil.

Official confirmation of the outcome was held up for five hours after the official close at 1pm yesterday by continued wrangling over whether SBC Warburg had broken takeover rules.

On Thursday, BET claimed that 27 million shares sold by the merchant bank to Salomon Brothers, most of which were immediately sold on to an offshoot of Rentokil, should be disallowed in counting acceptances of the offer. This was because, as a broker and underwriter to the bid, it was a related party which is banned under the Takeover Code from dealings that assist either side.

The Panel's executive last night confirmed an initial investigation on Thursday that there had been no breach of the rules. BET said it would not appeal to the full Panel over the ruling, clearing the way for Rentokil to declare its offer unconditional.

The dispute turned out to be academic as the stake, representing around 2.8 per cent of BET, would have made no difference to the outcome of the bid. But the threat of an appeal kept the two sides in discussions with the bid authorities most of the afternoon.

BET said that "given the level of acceptances, any appeal to the Panel would not be in the interests of shareholders, employees or the company". However, it added that it "believes that there should be an overall review of dealings by connected exempt market-makers so as to ensure that other target companies are not similarly disadvantaged in the future".

BET's results confimed its estimate made during the bid that profits before tax and exceptionals had risen 32 per cent to pounds 146m for the year to March. A final dividend of 3.7p takes the total 27.5 per cent higher to 5.1p.

But the figures were largely of historical interest, given the Rentokil victory. Clive Thompson, chief executive, said: "We look forward to welcoming all BET employees to the world's finest and now largest business services company - Rentokil."

The takeover is likely to lead to a bonanza for BET directors. Mr Clark is expected to be the biggest winner, with a pay-off of around pounds 5.6m. But unlike other takeovers, Rentokil has suggested that job losses elsewhere will be relatively minor, measured in "tens or hundreds".

Rentokil had been tipped to win from the start, but after a slow start, BET's defence staged a late come-back. At the eleventh hour last week, BET started to rally institutional support for Mr Clark. First M&G Investment Management, the group's biggest shareholder with 7.5 per cent, announced that it would not be accepting the Rentokil offer.

In a letter to Sir Christopher Harding, the fund management group praised Mr Clark's success over the past few years in rescuing BET from its "parlous" state in 1991. "We believe BET has very attractive prospects and look forward to the long-term benefits that we believe will accrue to our investors from BET remaining independent."

The M&G move was followed up earlier this week by more institutions coming out in favour of the defending group, taking its public support to holders of 17.25 per cent of its shares.

But the 60 days of the bid process have also been marked by a high degree of acrimony.