T&N's shares leap on pounds 1.7bn bid approach

T&N, the engineering group, looked set to be plunged into a bid battle yesterday after it revealed it had received a pounds 1.7bn approach from Federal-Mogul Corporation, a big US motor components group.

The news prompted a 60.5p leap in the share price to 242.5p, well ahead of the US group's indicated offer value of 235p a share in cash. Analysts said this was just a sighting shot and are confidently expecting others to enter the fray. They suggested that a price of more than pounds 2bn would be required to win the British group, which as Turner & Newall was once one of the world's largest producers of asbestos.

Bid rumours have swirled around T&N since last November, when it announced an innovative pounds 1.2bn deal combining insurance with provisions to cap the remaining asbestos liabilities. Suggested possible bidders have included GKN, the British defence to automotive parts group, and Dana Corporation, another US group rumoured in June to be ready to mount a joint bid with Federal-Mogul worth pounds 1bn. Any successful bidder would have to take on pounds 253m of unfunded asbestos liabilities from the November deal and pounds 200m of debt.

T&N directors were locked in meetings with their advisers at NM Rothschild, the merchant bank, yesterday and were making no comment apart from a short statement to the Stock Exchange. Sources close to the company were playing down the prospect of a white knight being brought in by the management, led by veteran executive chairman Sir Colin Hope. But Sir Colin has made no secret in the past of his willingness to do a deal if it made sense. "He will go for the right deal at the right price with the right company", the source commented.

News of the bid brings a major fillip for PDFM, the fund management group led by Tony Dye, who has been criticised for betting on a significant market fall. Yesterday, the group's 25 per cent stake in T&N, accumulated over the last two years or so at an average price of 155p a share, was showing a profit of pounds 116m.

A takeover of T&N would mark the culmination of a remarkable turnaround for the group under Sir Colin. Formed in 1922 as the result of a merger of Turner Asbestos with Newall Insulation, it became an important part of the industrial landscape. But as the deleterious effects of the fire- proof material became clear, T&N was nearly brought to its knees by a string of law suits which have led it to pay out more than pounds 350m in compensation payments.