Trust Motor approach worries institutions

INSTITUTIONAL investors in Trust Motor Group, the car distributor formerly known as Barr and Wallace Arnold, expressed concern yesterday after the company disclosed it had received a bid approach from its management priced at about the net asset value of the business.

The management team is led by Nicholas Barr who owns 7 per cent of the company. His brother Robert and Trust Motor's former chairman Malcolm Barr own a further 9 per cent.

The company said that, provided discussions reached a satisfactory conclusion, it expected an offer of around 220p valuing the company at pounds 33m. Less than nine months ago, the shares were trading at 343p.

In August last year the company sold its Wallace Arnold coach tours business for pounds 42m to a management buy-out team and paid out a 120p special dividend to shareholders costing pounds 18m. Since then the shares have drifted down by more than 200p. Yesterday's bid announcement lifted the shares from 139.5p to 196.5p.

One large shareholder said: "We will want to look at this deal very carefully to make sure shareholders are not being legged over."

Another institution said: "We will scrutinise the deal once it is in the open and if we don't feel it is a good price we will be looking for other buyers to step in."

Richard Bell, Trust Motor's finance director who is not part of the buy- out team, and the non-executive directors formed an independent committee to review the offer and asked its advisers Hambros to seek other indicative bids. As a result the independent directors are in discussions with one other potential purchaser apart from the management team. Trust Motor operates a number of Ford, Vauxhall and Peugeot dealerships and bought a body repair business last December. In the half year to last June it made a pounds 2.3m pre-tax profit on turnover of pounds 122m.

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