Rothschild supports 600p bid for broker

Smith New Court Shareholder softens stance on takeover by Merrill Lynch or Commerzbank

DAVID HELLIER

and JOHN EISENHAMMER

Sir Evelyn de Rothschild, chairman of NM Rothschild and the largest shareholder in Smith New Court, has indicated to bidders that he will support a bid for the UK stockbroker pitched at around 600p a share.

The indication from Sir Evelyn that he is prepared to accept a bid at all, even if at a rather high price, was being seen yesterday as a sign of significant movement on his part from the rather hostile position he adopted last week.

If either bank offers as much as 600p to gain Sir Evelyn's prior approval, it would represent a substantial premium on yesterday's share price, down 5p to 517p, and a 25 per cent increase on the price of Smith's shares 10 days ago.

Sources close to the negotiations have said they expect Merrill Lynch, the US investment bank, to announce a formal offer at the beginning of next week, though not necessarily at 600p. Commerzbank, the German bank, remains interested.

The City reacted with disappointment yesterday to the lack of a progress report on the takeover talks from Michael Marks, Smith New Court's chairman, at the firm's annual meeting.

Mr Marks, facing more than 200 shareholders in Smith's Farringdon Road, London, offices, said he could not add substantially to the firm's public statement last week that it was in talks with interested parties.

Asked whether NM Rothschild, with its near-26 per cent shareholding and informal links to Smith, had any role to play in the stockbroker's future, Mr Marks replied: "I do not intend to comment on press speculation or on Rothschild's intended links in the future. The relationship with Rothschild has been cordial during my time here and I hope that it will continue to be."

Sir Evelyn met representatives from Merrill Lynch on Wednesday.

Merrill is believed to be prepared to press ahead without his approval and launch a formal offer but it is still trying to reach agreement both on price and on whether there should be any continuing commercial links with NM Rothschild. Mr Marks is believed to favour a takeover by Merrill Lynch.