Talks bring Hollick close to Blenheim purchase
Wednesday 17 July 1996
Sources close to both companies confirmed that negotiations continued yesterday with the two sides still apart on the issue of price. An announcement to the Stock Exchange could be made within a week.
Shares in Blenheim yesterday bucked a tumbling stock market, rising 15p to 438p, as bid talk again did the rounds.
Takeover speculation has swirled since June when movements in Blenheim's share price prompted the company to issue a statement that it had received an initial approach from an unnamed company.
Reed International, Emap, Softbank of the US and France's Havas were mentioned as possible bidders, though United has always been seen as the front-runner. It is understood Emap has already ruled itself out, and speculation was growing last night that United had the field to itself.
United's initial offer, believed to be in the region of 400p-450p a share, was rejected by Blenheim's executive chairman, Neville Buch, who is holding out for a bid of 500p-550p. At the upper end of the range that would value Blenheim at more than pounds 500m. Directors of Blenheim hold about a quarter of the equity while French utility Generale des Eaux has a 15 per cent stake.
However, United is resisting Blenheim's demands to cough up a large premium. "Clive Hollick is not known for paying silly money," an insider added.
Signs that the protracted talks had entered the end-game stage were welcomed by media analysts. "This has been going on for weeks," one said. "It's had an adverse effect on United's share price and is distracting Blenheim's management from running its business."
Based on house broker BZW's 1997 pre-tax forecast of pounds 43.3m, a 550p-a- share price for Blenheim would imply a chunky exit multiple of 22 times.
Buying Blenheim would be United's first big move since the company was formed three months ago through a pounds 3bn merger of United and MAI. Analysts say that the logic of a tie-up with United is convincing. Miller Freeman, United's exhibitions business in the United States is strong, while Blenheim is a big player in the UK and Europe.
A 550p-a-share offer by United would be less than 10 per cent shy of Blenheim's all-time peak reached three years ago and would provide the company's long-suffering investors with a face-saving exit.
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