Berkeley and its directors - including Tony Pidgley, the chief executive - had been buying shares since 1 December and, by the end of last week, the directors owned 200,000, the company 128,000. They were flushed out by a section 212 notice from Higgs, which contacted Berkeley. Higgs says Berkeley 'indicated its intention to add to its stake'. That announcement was issued just before 8am yesterday, sending Higgs' shares up 15p to 58p, adding more than a third to its market value. Four hours later, Berkeley announced that all the shares had been sold. The directors assigned their share of the pounds 40,000 profit to the company.
Berkeley insists that it simply thought the shares were undervalued and bought them as a trade investment. It sold to stop speculation that it was poised to launch a bid - although its shares, up 4p to 318p on the day, hardly moved on the announcement of the stake.
Others believe Berkeley was interested in Higgs' housebuilding business, which would be a logical fit, and Berkeley has signalled its intention to make acquisitions. By selling the shares so quickly, it risks developing a reputation as a share trader, damaging its premium rating. The fact that some of the shares were on the directors' personal account does little to improve the perception.
Higgs & Hill's haste in issuing the section 212 and announcing the stake underlines how vulnerable it feels to a bid. But, in deterring one potential predator it may simply have highlighted its attractions to others.
Its nervousness is understandable. Even after the rise in its shares, they closed yesterday at 49p, less than a third of the expected net asset value at the end of December. Its balance sheet is strong, with gearing only about 10 per cent, and - unlike many of its weaker rivals - it has not been forced to take on unprofitable contracts to keep the cash flowing in.
Consolidation in the sector is necessary, but the risk of taking on loss-making contracts deters most bidders, who prefer to cherry-pick business from the receivers. Higgs & Hill is one of the few attractive targets around. Yesterday's events have hardly helped shore up its defences.
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