Outlook: Allied Carpets

SHAREHOLDERS IN Allied Carpets can hardly believe their luck. A couple of weeks ago they were sitting on a duff investment that had lost 90 per cent of its value in the past three years, thanks to an embarrassing accounting scandal and the ruthless marketing skills of the carpet king Lord Harris. Now bidders are queuing up to take the business off their hands.

In a sense it is similar to the situation with Hillsdown Holdings, another perennial under-achiever, and further evidence of the old adage that eventually every dog has its day. We should not be surprised that other buyers are emerging from the undergrowth. After Brown & Jackson and Wassall had shown their hands, it was always likely that other bidders would start sniffing around.

At the current level the shares are still bombed out, and any bid is bound to look a trifle opportunistic given the upturn in the housing cycle. So could Allied have a future as an independent company? The new chief executive, Geoff Brady, has impressed those institutions he has seen so far. He may have the nous to guide the company back to some sort of respectability, though the bidders will never be far away if he stumbles. That is reassurance of a sort for investors. However, even at their current bid-inflated level, the shares remain a long, long way short of the 251p a share 1996 issue price.