Takeover approach pushes Chubb to three-month high

Chubb, the world's third-largest security group, yesterday revealed it had received a takeover approach that may lead to an offer for the company.

The news sent shares in Chubb, which provides electronic security and fire prevention systems as well as security guards, monitoring services and locks, to a three-month high. A statement from Chubb issued yesterday morning, after its shares soared by more than 10 per cent, said it had received a preliminary approach which may or may not lead to an offer. Shares hit a high of 92p during the day before closing 19 per cent up at 79p, valuing the company at £654m.

Speculation as to who was behind the approach initially focused on two rival security companies, Group 4 Falck and Securitas, both having expressed interest in Chubb in the past. Both parties, however, ruled themselves out of the frame yesterday.

Securitas revealed last summer it was interested in buying Chubb, but talks collapsed shortly after the initial interest was expressed. Chubb's shares hit 213.5p after the announcement, driving the price of a bid beyond what Securitas was prepared to pay. Since then, Chubb's share price has collapsed more than 70 per cent and bid rumours have persisted.

Rentokil Initial, another possible bidder, yesterday refused to comment on whether it was behind the approach, but a spokesman said it was "always looking at companies in the sector". Securicor, and the US conglomerate Tyco International, were also named as possible suitors for Chubb, as was Secom, the Japanese security business. Although a trade buyer would be better able to strip costs out of Chubb, many analysts suspect that a private equity firm is behind the approach.

Any bid for Chubb would have to be priced between 85p and 100p a share to be successful, according to analysts.

"Everyone has run their slide rule over Chubb, and many of them have then walked away," Matthew Lloyd, at ABN Amro, said. "The price has put people off in the past. Chubb has a strong brand, but it has never delivered the growth it should do. This is still only an initial approach, which is a long way from a bid coming forth. We have been in this situation before, and I don't see that very much has changed."