BAT trading for investigation

Press, 19 July 1989, Page 41

BAT trading for investigation

NZPA-AP London London’s Stock Exchange is to conduct a routine investigation into trading in BAT Industries shares and options before last week’s hostile £l3 billion ($NZ26.88) bid for the diversified British conglomerate. Anglo-French financier, Sir James Goldsmith, joined by British merchant banker, Jacob Rothschild, and Australian entrepreneur, Kerry Packer, offered 850 pence (about SNZ24) a share worth of securities for BAT, which quickly rejected the bid. “We really don’t discuss individual cases,” said a spokeswoman for the stock exchange, who wasn’t identified, in accordance with British practice. She said, however: “We would automatically investigate in a bid of this size ... Particularly where there is unusual volume movements or other suspicious factors that would alert our attention.” Prices and trading volume in both BAT shares and options surged in the two trading sessions immediately ahead of the bid announcement. BAT shares climbed 19 pence a share in moderately active trading on Monday last week, the day before the bid, after

advancing 18p the previous Friday. The shares closed at 90Ip the day of the bid, up 207 p pence. In Monday’s session the shares finished at 879 p up 2p. As for options, 9864 BAT options contracts changed hands on Monday last week, representing an underlying volume of 10 million shares, the spokeswoman confirmed. That accounted for nearly a quarter of the options market’s total volume that day. On the Tuesday, another 11,161 contracts had been traded. The average daily volume in the previous week had been around 2000 contracts, including the 4000 contracts traded on Friday, also an unusually active day, she confirmed. An investigation into the BAT trading could take months. Even after its conclusion, the exchange itself is unlikely to disclose the outcome. “We never officially, comment,” the spokeswoman said. While the stock exchange regularly engages in such probes, it is unable to bring charges. Instead, it submits its findings to the Department of Trade and Industry, which then decides whether or not to prosecute.