BTR Siebe pressed to amend terms of deal

PRESSURE IS mounting on BTR and Siebe to renegotiate their pounds 8.7bn merger amid concern among institutional shareholders that the terms of the deal undervalue BTR.

At last night's closing prices, BTR shares are trading at a 10 per cent premium to the "see through" value of Siebe's all-share offer.

Since the deal was announced on Monday, BTR shares have strengthened much more than those in Siebe. This has reinforced the view among some investors that Siebe is trying to snap up BTR on the cheap or that a rival bidder might enter the fray.

Opposition to the deal is thought to be greatest at Phillips & Drew, the fund management arm of UBS, which holds 11 per cent of BTR. Other large shareholders in BTR include Franklin Templeton, the United States fund manager, which holds just over 9 per cent, and Prudential, which has 4.5 per cent.

Shareholders in BTR are being offered 0.533 of a Siebe share for each share they hold in BTR, giving them 45 per cent of the enlarged group. At Siebe's current price of 219p, this gives BTR shares a "see through" value of 116p against their actual price in the market of 128p.

There is little crossover between the shareholder registers of the two companies. The biggest shareholders in Siebe are Janus Capital, Barclays Global Investors, Legal & General, General Electric and Lloyds Private Banking - each holding stakes of between 2 per cent and 3 per cent.

The merger would create the world's biggest manufacturer of automation and processing equipment, leapfrogging rivals such as Siemens, ABB and Emerson Electric.

The two companies have also promised that the merger will yield savings of pounds 250m in three years.

Allen Yurko, chief executive of Siebe and chief executive designate of BTR Siebe, said last night he was not aware of any shareholder unhappiness. "I have been talking to institutions all day and no-one has raised the issue with me. In my opinion, the strategic logic of the deal sells it to all shareholders."

So far, about 15 per cent of shareholders have been seen. The institutional roadshow will last another fortnight and next week rolls on to the US where investors hold 25 to 30 per cent of each company.