T&N's leading shareholders yesterday left Federal-Mogul in no doubt that they would reject a full-blown bid at the 235p- a-share price indicated last Friday. Three big investors, PDFM, M&G and Schroder Investment Management, together control 46 per cent of T&N and are unlikely to accept a bid for less than 270p a share.
One leading institution called on Federal-Mogul to launch a formal takeover offer at a higher price or take its hat out of the ring. "I don't think anybody thinks 235p a share is a fair price for the company. Let's say it's highly unlikely that we would accept that price."
Sir Colin Hope, T&N's chairman, effectively raised a for sale sign over the business yesterday as advisers indicated that they expected to receive several rival offers for company. The T&N camp are thought to have viewed a takeover approach as inevitable after the Manchester-based group late last year revealed a ground-breaking pounds 1.2bn insurance deal to settle most of its asbestos liabilities.
Analysts yesterday predicted rival bidders could be prepared to pay up to 300p a share to take control of T&N. Robert Speed, from Henderson Crosthwaite, said: "I'd be surprised if something doesn't materialise fairly soon. T&N's businesses are off a high order and the company is worth more than people think."
The mounting speculation fuelled T&N's share price, which surged a further 11p to close at 253.5p. The shares have increased in value by 40 per cent since rumours of takeover approaches materialised over the summer. PDFM built up its 25 per cent stake over the past two years at an average of 155p a share.
Federal-Mogul last night declined to comment on the talks with T&N, though Dick Snell, the company's chairman, was staying in London. However a company source insisted the discussions with T&N remained friendly and argued that a 235p recommended offer was still possible.
Other potential bidders moved yesterday to dampen speculation of an approach.
Dana, another US car parts group, said it had no involvement in a possible bid. GKN, the car components to Westland helicopters business, yesterday appeared to rule itself out of the running for a full-scale rival bid for T&N, but refused to discount an interest in buying T&N's powder metals division following a break-up bid.
However, a source close to GKN suggested T&N's outstanding asbestos liabilities could be a barrier to such a move. "There is still the problem of asbestos. If the ongoing liability was divided up pro -rata then the answer is no," said the source.