THE LONDON Stock Exchange yesterday removed one barrier to LucasVarity's transfer of its listing to New York when it allowed UK investors to keep their London-listed shares in the Anglo-US engineer.
The LSE ruled that UK shareholders would be able to retain a new set of shares to be issued when the car parts and aerospace group moves its headquarters and primary listing to the US. The exchange at first ruled that the new shares had to be exchanged for stock in the new US holding company within 18 months, but agreed to lift this after intense pressure from the company.
The ruling enables Lucas, formed in 1996 by the merger of Lucas Industries and Varity of the US, to maintain a secondary listing in London. It will allay the fears of some UK institutions opposed to the move.
In meetings with the company last week they argued that they would have been forced to sell their stakes in the company as they were prevented from investing in US companies. However, it is thought that some Lucas investors, which include Schroders, Mercury Asset Management and Prudential, still have doubts about the move and are threatening to vote against it at an extraordinary shareholders' meeting on 6 November.
A LucasVarity spokesman said: "This decision will be welcomed by a number of UK institutions. We are confident that the move will be approved at the meeting."
However, some shareholders are concerned that the London-listed security will be extremely illiquid, making UK dealings in Lucas difficult and expensive. The Association of British Insurers, which has been co-ordinating the campaign against the move, said the LSE ruling would "satisfy the requirements of a number of institutions, but it will not be a matter of substance for the majority of the shareholders".
The ABI has recently urged the company to address shareholders' concerns and give UK-based investors a "compelling reason for the move".
At the time of last month's surprise announcement, Lucas said the change of listing was needed because the majority of its shareholders were now from the US. It added that the transfer of the head office to Buffalo would allow it to be closer to its customers and to compete better with American rivals.
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