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Government Clears Hoylake’s Offer For BAT

September 21, 1989

LONDON (AP) _ The government today cleared Hoylake Investment Ltd.’s $21 billion bid for the British conglomerate BAT Industries PLC.

The decision follows last week’s ruling by the Panel on Takeovers and Mergers allowing Hoylake to suspend its all-paper bid until it resolves regulatory problems with state insurance commissioners in the United States.

Thursday’s approval came in the form of a decision by Trade Secretary Nicholas Ridley not to refer the bid to the Monopolies and Mergers Commission.

However, the notice from Ridley said the matter could be reconsidered if there is a ″material change″ in the terms of the bid or other ″material facts.″

BAT shares were up the equivalent of 11 cents at $12.96 on the London Stock Exchange Thursday morning.

Hoylake, an investors group led by the Anglo-French financier Sir James Goldsmith, offered $13.87 worth of securitie for each BAT share.

BAT said it regretted Ridley’s decision.

The British conglomerate, comprising holdings in tobacco, paper, retailing and financial services, said a referral to the monopolies commission ″would’ve provided an opportunity for the government to establish a coherent policy on the controversial question of highly leveraged bids for major companies using junk bonds, with their negative potential for the markets, for companies and for small shareholders.″

BAT Chairman Patrick Sheehy said ″seeing off″ Hoylake remained the company’s first priority.

″We are continuing our strategic review in light of the historic undervaluation of our shares,″ he noted, adding that the company was determined to ″take suitable measures to provide a sustainable long-term increase″ in shareholder value.

Hoylake had requested that the takeover panel grant it a lengthier bid timetable because of the need to secure approval from the U.S. state insurance commissioners for a change in ownership of BAT’s Farmers Insurance Group Inc. of Los Angeles.

BAT last week appealed the takeover panel’s decision allowing Hoylake to renew its offer for BAT within 21 days of overcoming its regulatory obstacles in the United States.

Normally in Britain, a bidder is given 90 days to win a majority stake in its target. If the bidder fails, he must wait at least a year before bidding again.

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