Don't bet on Costain

An announcement that a company is in discussions that could lead to a takeover offer is usually the signal to buy. But that could be a big mistake in the case of Costain, the builder.

The shares edged down by a halfpenny to 23.5p on Friday after just such a declaration. Any bid will be a rescue for a deeply-troubled business - and analysts are talking the price as low as 18p. The odds are that a foreign construction group will buy thecompany to give itself a toehold in this country with a revered old name to play with. Hanson, BICC and P&O have also been mentioned as possible buyers.

The question is, how did the Costain management let things get to such a state? It seems that yet again a distinguished bunch of non-executives, led by the former property magnate, Sir Christopher Benson, did not do nearly enough to restrain the chief executive - one Peter Costain - from committing the company to a succession of ill-fated ventures. The official line is that the board was united on the disastrous expansion policy, and was equally united about the U-turn that led to the decision to seek a rescuer. It is more likely that Sir Christopher and his colleagues did eventually blow the whistle on the deal-happy Mr Costain. A pity they didn't tug on the leash a few years earlier.