View from City Road: Evode's days are numbered

THE game is up for Evode, the glue maker. Whatever chance it had of fending off Wassall's bid, Laporte's intervention yesterday morning almost certainly sealed its fate.

Andrew Simon, the chairman, and his team had it coming. The question now is into whose hands will Evode fall.

Evode was still saying yesterday that Wassall's 95p seriously undervalued the company, so its board can scarcely turn around and recommend an offer of pounds 1 a week later. But if Laporte, headed by Ken Minton, can agree a price, there is nothing to stop it making a hostile bid. Which brings us to how much Evode is worth.

Wassall's opening bid of 80p already valued the glue maker at more than 20 times prospective earnings, before yesterday's final offer upped the ante by another 18 per cent. This looks generous and the mini- conglomerate will be loath to squander its reputation for not paying over the odds.

But Evode shareholders should wait to see the colour of Laporte's money before coming to any conclusion. A Laporte bid is still fraught with caveats, the chemicals group saying it will bid only if the acquisition will not dilute its earnings or damage its balance sheet.

Like Wassall, it claims it can immediately improve Evode's very poor margins. It can offer the added benefits of synergy in adhesives, expertise in research and development and economies of scale. It argues that as a sector specialist it can wring long-term growth out of Evode beyond the operational efficiencies and rationalisation that Wassall would undoubtedly introduce.

Yesterday's 20p drop to 629p in Laporte's share price suggests it has yet to convince investors of the wisdom of paying so much for Evode.

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