Chubb stock soars 15% on Swedish approach

Chubb, the security group, yesterday ended months of speculation about its future by saying that it is in talks with its larger rival Securitas, of Sweden, which could lead to a bid worth more than £2bn.

Chubb's shares soared 15 per cent to 209.5p on confirmation of the talks, having risen from 170p in the past two days.

The British company said the discussions were at an "early stage". Analysts believe that Chubb's worth could go as high as 258p a share, valuing the company at £2.65bn, due to the demand for security services after 11 September and its strategic fit with Securitas.

This valuation would reap windfalls for Chubb's chairman, Roger Carr, of £1.55m and its chief executive Robert Gasparini, of £370,000.

Chubb, the world's third-largest provider of security services, has widely been seen as a bid target since it demerged from Williams in 2000, along with the conglomerate's other divisions, Kidde, the fire protection specialist, and Yale.

Chubb got off to a rocky start with a dramatic profits warning. But its results for 2001 reassured the City that Chubb's management has ironed out most of the difficulties.

Securitas, which has a market capitalisation of £4.7bn and is the world's largest security group, may have to issue paper in order to raise the necessary sum for the deal, as it has already swallowed a number of smaller players in the US recently.

The Swedish group has approached Chubb because it believes that its own areas of specialisation, of providing security guards and handling money, would be enhanced by Chubb's main business, which is creating alarm systems.

Securitas thinks that especially after 11 September, businesses want both services to be offered by security companies. It aims to create significantly enhanced revenues from a tie-up.

There would also be little geographical overlap between the two. Chubb operates in the UK and has a growing Asia-Pacific business while Securitas is a dominant player on the Continent and in the US.

It is possible that rival companies would seek to intervene in a tie-up between Securitas and Chubb, but this is considered unlikely.