Warburg calls for dawn raid probe

Battle for Fisons: Bidder increases stakes

Rhone Poulenc Rorer yesterday raised its hostile bid for Fisons and snapped up 16.6% of its shares in the stock market. But the move was immediately attacked by Fisons bankers, SBC Warburg, who demanded an inquiry into the dawn raid carried out by RPR's adviser Hoare Govett.

Warburg complained to the Stock Exchange and Takeover Panel, as RPR increased its bid for Fisons from 240p to 265p a share and raised its stake in the target to 16.6 per cent.

Fisons advisers were concerned about a number of share trades registered around 9.26am and 9.42am that may have made it appear as though RPR had snapped up more of Fisons than it had.

It was unclear whether Hoare Govett was behind the contentious transactions, and in the heat of the moment it is possible that the trades were mistakenly registered.

But the battle between Fisons and RPR has become increasingly bitter, and both sides are looking at ways to undermine their opponent's position. Hoare Govett were unavailable for comment.

RPR's renewed bid values Fisons at pounds 1.83bn. RPR said its renewed bid was final, but added that it reserved the right to raise it again should a third party bidder emerge or the UK's Takeover Panel allow it.

Stuart Wallis, Fisons' chief executive, said the final status of the second bid needed to be clarified.

"What I suspect is that it is final, but we would like that verified. Any other party would not want to reveal their hand until after Rorer's final bid." he said.

Mr Wallis declined to say if Fisons had had talks with any other potential bidders, but added that it would be unwise "to rule anything out."

He maintained that approaches were often made only after the original offeror had made a final move. He went on that Fisons would be producing a full response to the RPR terms "in the next few days" which would challenge a number of the assertions in the new offer document.

He said if RPR wanted a recommendation from the Fisons board then it would have to raise its bid again - something the Takeover Panel clause in the offer document may allow.

"We don't feel the bid is something we would want to recommend," he said, declining to name a price for the firm.

Robert Cawthorn, chairman of RPR said the new offer reflected both the intrinsic value of Fisons and the value of its contribution in terms of RPR's future growth.

"It is difficult to see how this bid could be seen as undervaluing the combined group. RPR is offering a very hefty premium," said Mr Cawthorn.

Analysts say the pricing of Rorer's second offer looks as if the firm believes it can win the bidding war in the marketplace and is unwilling to pay any more just to get a recommendation from Fisons' board.

Fisons said the near 15 per cent stake picked up in the market by RPR yesterday morning had resulted from arbitrageurs taking profit rather than through institutional selling. Fisons' share price currently stands 3p shy of the offer level at 262p. More than 250 million shares changed hands.

Mr Wallis will be handsomely rewarded by a takeover, thanks to his share options, which have risen in value as Fisons finances have improved.

Together with compensation for the loss of his pounds 315,000 a year salary, Mr Wallis could walk away from his year at Fisons with around pounds 2m.

After a series of resignations following the revelations that profits had been inflated, Mr Wallis moved swiftly to repair Fisons balance sheet and reputation.