Latest U.K. market shake-up
By
JULES STEWART
NZPA-Reuter London
TSB Group Pic’s £777 million (SNZI92BM) agreed bid for merchant bank Hill Samuel Group Pic is the latest in a series of takeover moves that have shaken the deregulated U.K. financial markets in the aftermath of last October’s “big bang.”
Hill Samuel said it would recommend the TSB’s offer to shareholders as “fair and reasonable.”
TSB chairman, Sir John Read, said: “The acquisition of Hill Samuel is a major step for TSB in its development as a financial services group. This will provide TSB with its own merchant bank and international investment management business.”
Hill Samuel has been vulnerable to a bid since
Union Bank of Switzerland backed out of merger talks in August In September, it rebuffed a take-over bid by advertising agency Saatchi and Saatchi Co Pic.
Analysts viewed Hill Samuel, with a market capitalisation of some £6OOM (SNZI4BBM) as lacking in financial muscle and structural flexibility to compete in the increasingly competitive London market They said it needed at least £1 billion to survive.
“The big bang deregulation that came into force almost a year ago is yielding casualties,” bank analyst John Tyce, of brokers Alexanders Laing and Cruickshank, said.
Another victim is merchant bank Guinness Peat Group Pic in which New Zealand financial services
group Equiticorp Holdings said on Thursday it had bought a 50.6 per cent stake.
Earlier, Guinness Peat told shareholders it was "realistic” to acknowledge the company would be taken over by Equiticorp. Equiticorp’s bld had been challenged by publisher Robert Maxwell, who built a 14.9 per cent stake in Guinness Peat before he said he was withdrawing from bidding for control of the group. Maxwell has also bought a stake in merchant bank Henry Ansbacher Holdings Pic. British and Commonwealth Holdings Pic chairman, John Gunn, is another active player in the reshaping of London’s financial world. -
He bought the financial services group Mercantile House Holdings Pic this
summer for £566M (INZI4O3M). . Gunn, who also bought a 7.1 per cent, stake in Singer and Friedlander Group Pic, said he would look at parts of Hill Samuel and Midland Bank Pic. The latter has also been the subject of takeover speculation. Hill Samuel said yesterday it would seek a purchaser for its stockbroking arm, Wood Mackenzie and Co, Ltd. Market sources said Midland, which is trying to rebuild its relatively weak capital base, will probably remain independent in the short tenn.
They said the Bank of England would oppose a hostile bid and look With scepticism at an agreed offer.
Saatchi and Saatchi’s bid last month for Midalso rejected.
Some financial institutions have taken defensive positions.
Hambros Pic ! has brought Banco de Bilbao SA of Spain into the group with a sper cent stake to shore up the U.K. merchant bank against hostile predators.
“It doesn’t hurt to have friends on the board,” said Hambro’s chairman, Charles Hambro.
Hambros had previously given up a 6.4 per cent stake to Institute Bancario San Paolo Di Torino of Italy, and analysts say the U.K. bank is now relatively welldefended against a takeover.
In another area of financial services, New Zealand’s Brierley Investments, Ltd, and Cie Du Midi SA of France are rivals for control of insurance firm Equity and Law 1 ’" ■ 1
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Press, 6 October 1987, Page 48
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545Latest U.K. market shake-up Press, 6 October 1987, Page 48
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