The way Guinness rigged the takeover

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The Independent Online
IN JANUARY 1986, Guinness launched a record-breaking pounds 2.5bn takeover bid for the Distillers Scotch whisky group. What happened over the following three months was to turn into one of Britain's most dramatic financial scandals, with a cast of characters spanning the highest levels of business, the City and politics.

Distillers was already the subject of a hostile offer from James Gulliver's Argyll supermarkets group, and a bitter, no- holds-barred fight ensued. The two rival bids were made largely in the form of shares, with the result that the company with the strongest share price would also seem to have the more attractive offer.

In an effort to see off the rival bid, Guinness set in train what appears to have been one of the largest and most concerted attempts to ramp a share price to have been seen on the London stock market. A network of financiers and businessmen encompassing several continents was recruited into the exercise. It is estimated that nearly pounds 300m worth of Guinness shares were secretly purchased by supporters during the course of the bid.

A large proportion of this support was achieved by offering participants illegal indemnities against loss and 'success fees'. One of the participants, the Wall Street share dealer Ivan Boesky, eventually told US investigators about the Guinness shares fraud, and a Department of Trade and Industry investigation was ordered. Resignations and arrests followed in short order. In all eight people were arrested and charged over the affair, but only four of them - Ernest Saunders, Gerald Ronson, Anthony Parnes and Sir Jack Lyons - were convicted.

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