Rensburg board rebuffs £134m bid

Rathbone's 610p-a-share offer depends on merger deal with Carr Sheppards Crosthwaite being shelved

Rensburg, the Leeds-based boutique fund manager, launched a vigorous defence against a bid approach from its larger rival, Rathbone Brothers, yesterday, claiming it was committed to completing the reverse takeover of Carr Sheppards Crosthwaite (CSC) it launched last month.

Rensburg, the Leeds-based boutique fund manager, launched a vigorous defence against a bid approach from its larger rival, Rathbone Brothers, yesterday, claiming it was committed to completing the reverse takeover of Carr Sheppards Crosthwaite (CSC) it launched last month.

The Liverpool-based Rathbone Brothers made its unofficial 610p-a-share bid for Rensburg just three days before Christmas, it emerged yesterday. The offer, valuing Rensburg at £134m, was conditional on receiving an agreement from Rensburg to abort its reverse takeover bid for CSC, one of London's oldest brokers.

Rensburg's shares were suspended at 500p on 10 December when it first announced plans to reverse into CSC, which is owned by Investec, the South African fund management group. Under the terms of the deal, Rensburg will issue 38 million shares to Investec, giving the South African group with a 64 per cent stake in the enlarged company.

In a statement, Rensburg - whose senior non-executive director is the shadow paymaster general, Andrew Tyrie - said it did not believe that breaking the CSC deal to accept Rathbone's offer would be in the best interests of its shareholders.

Mike Burns, Rensburg's chief executive, said: "We have known [Rathbone Brothers] for a long time, and have never received any overtures prior to the announcement of our merger with Carr Sheppards Crosthwaite. We will continue to fulfil our fiduciary duty and evaluate any approaches in the best interests of our shareholders, clients and staff."

Rathbone has come under pressure over the past year to get involved in the recent round of consolidation in the private client investment management sector. It has so far been unsuccessful.

The group confirmed it had approached Rensburg shortly before Christmas, and said it believed a merger of the groups would create one of the strongest companies in the sector. It added that shareholders from both groups would also benefit from their numerous synergies.

Rensburg's immediate rejection of the offer is believed to have been driven by the determination of its advisers, Fenchurch Advisory Partners, to complete the CSC deal.

Mark Powell, Rathbone's chairman, said he has requested access to Rensburg's books, to carry out due diligence on the company. He said that once this had been granted, Rathbone would consider whether to "firm up its offer". Mr Powell explained that this could mean either upping its bid, or removing some of its preconditions. He would not rule out making a renewed offer for Rensburg after its takeover of CSC was complete. "Anything's possible," he said. "But clearly a three-way merger carries much greater execution risk than a two-way merger."

But he ruled out going hostile. "This was an approach which sought an agreement to a transaction," he said. "If we were going to be hostile, we would have just slapped a bid in."

Shareholders said they were disappointed that Rensburg had rejected the offer, which represents a 22 per cent premium to the group's suspended share price. However, sources close to Rensburg said the Rathbone offer had not taken account of the 45p payout that is to be paid to Rensburg investors once the CSC deal was complete.