Salvesenwooed by Hays boss

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The Independent Online
Hays chief executive Ronnie Frost was in talks yesterday with members of the Salvesen family to ascertain at what price they would be willing to sell their shares.

The family, which owns 38 per cent of Christian Salvesen, the transport and logistics group, was thought to be behind the rejection of a takeover offer of 370p a share from logistics rival Hays last week.

The approach comes as pressure mounts on Frost from institutional shareholders not to overpay for the Salvesen business, which Hays has been pursuing on and off for four years.

The institutions would take a dim view of a hostile Hays offer of 400p a share, but the preferred route of an agreed bid of 390p is thought to be unacceptable to the Salvesen family.

Analysts believe a combined Hays/Salvesen would realise pounds 20m in administrative cost savings in the first year - not enough to cover the cost of a hostile bid battle. Longer-term synergies could be found, especially from combining the companies' struggling German subsidiaries.

Hays is keen to exploit the pan-European logistics network a tie-up would create, which would allow it to compete better for contracts with multinationals such as Ford. Hays/Salvesen could also cross-sell some unique services to each others' clients. Currently, logistics businesses are suffering from margin erosion and the high overhead of maintaining large networks. Hays believes a merger would produce greater economies of scale and allow the industry as a whole to restore its margins.

However this weekend the possibility of a higher bid hung in the balance, with Frost attempting to sway key members of the Salvesen family before sounding out institutions over a higher offer. "Any deal has to be in the interests of our shareholders," a source close to Hays said this weekend. "If that doesn't happen, Ronnie [Frost] is not afraid to walk away."

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