Wellcome offer passes pounds 100m

WELLCOME, the drugs company, is expected to have received applications for more than pounds 100m of shares in its public offer, which closed yesterday. Final figures will be announced today.

Advisers to Wellcome Trust, which aims to sell 330 million shares in all, have reserved pounds 180m of shares for the public. The rest will be sold to institutional investors through an international tender offer which closes on Friday.

Applicants in the public offer will not know how many shares they have received until after the share price has been set at the weekend.

The limited level of interest in the public offer gave rise to suggestions in the City yesterday that the size of the overall offer would be scaled down. However, advisers insisted that the size of the offer had not been finalised. It can be scaled up or down.

Separately, BZW, the investment house, announced details of its special facility, designed to allow BZW Investment Management to set up an indexed fund for Wellcome Trust, which wants to reinvest part of the proceeds of the share sale in UK equities.

BZW will buy shares in 450 companies from large investors at the half-way point between bid and offer prices or less.

The list of shares it will buy excludes Ratners, but includes many other stocks which have fallen recently, such as Taylor Woodrow and Costain.

It also includes a large number of small companies including Camellia, which is not even quoted on official Stock Exchange screens, and a number of investment trusts, including nine from the Fleming stable. Robert Fleming is global co-ordinator of the tender offer.

There were suggestions in the market that some investors would use the opportunity to sell unpopular or illiquid shares, which are not often dealt in.

The scheme was launched as a means of allowing investors to sell shares to raise cash to subscribe for shares in Wellcome. But many fund managers have already raised the required cash.

One observer suggested some fund managers would use the facility to raise cash to invest in gilts. Others would use it to allow them to reinvest proceeds in other sectors and companies.

One market maker said the effect would be to relieve selling pressure on shares generally.

Some fund managers are wary of the facility as it will provide BZW with detailed information about their portfolios.

BZW will buy limited quantities of each stock, buying those offered at the lowest price first.

The facility is for at least pounds 500m of shares but large investors said yesterday they understood BZW was prepared to buy up to pounds 1bn.