Last month the company warned that costs and uncertainties associated with the bid would hit this year's results
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Last month the company warned that costs and uncertainties associated with the bid would hit this year's results.First-half profits fell from pounds 26.6m to pounds 25.8m but the management said the full-year figures would be affected by bid costs of pounds 4m and further losses in its drug store outlets, where staff morale has been hit by the dragged-out bid process. The shares dipped 4p to 465p on news of the sale.Allen Lloyd retains 6.11 million shares worth pounds 28m and confirmed yesterday that he has "no intention" of selling his stake, "at least until the outcome of the MMC inquiry into the twin bids from Gehe and Unichem".Both bids lapsed in March when they were referred to the MMC.The British government said both bids raised competition concerns in the wholesale and European drugs markets.The MMC must report its findings by the end of June and the final DTI announcement will be a month later.It is possible that both bids will be blocked, which would cause a sharp fall in the Lloyds Chemists shares priceThe prolonged bid battle for Lloyds has been supporting the shares though recent results have been disappointing. The wife of Allen Lloyd, the chairman of the Lloyds Chemists chain which is the subject of a hotly contested pounds 650m takeover battle, sold her entire shareholding in the company yesterday, raising pounds 13.5m. Marilyn Lloyd sold 3 million shares at 450p, though the company denied the sale was related to the two bids for the group from Gehe of Germany and the UK's Unichem. The company said Mrs Lloyd had disposed of her stake "solely with the view to diversifying her assets".However, the sale will be viewed as an attempt by the controlling family to lock in profits ahead of the Monopolies and Mergers Commission investigations into the two bids.
The UK retail offer closes at noon on 15 May.The prospectus disclosed that Railtrack's costs for the sale are only pounds 27m before VAT, compared with a provision of pounds 46m made in Railtrack's accounts for the year to March 1995.Investment Column, page 20Diary, page 20. Before tax, these give a gross 18.8 per cent return on the part-paid price of 190p in the first nine months The net final dividend after tax will be 13.75p. It is expected the interim will be half as much.James Sassoon, a director of SBC Warburg, the global co-ordinators of the sale, said the 500,000 registrations last week were "a larger number for the final week than we have seen in any previous privatisation".The last-minute rush took the total number of registrations to 1.9 million, though advisers conceded it might have been accelerated by the shorter- than-usual period for registration.Mr Sassoon said the 1.9 million was two-thirds as many as registered for the much larger pounds 4bn sale of the Government's remaining stake in the electricity generating companies last year, privatisations twice the value of Railtrack.The Government said at least 30 per cent of the shares would be allocated to retail investors, but Mr Sassoon said "we could go north of 30 per cent and will do if the demand is there".Advisers believe that on the basis of the registrations so far the retail allocation could exceed 40 per cent even if it does not reach the maximum possible 50 per cent.In most past privatisations, at least 30 per cent of registrants have ended up applying for shares, and at that level the retail part of the offer would be about twice subscribed.Rory Tapner of SBC Warburg said that the roadshow of institutions in California earlier this week had produced "good quality feedback" and further presentations are to be made over the next fortnight in the US and Europe before the final price is set on 17 May ahead of the start of trading on 20 May. Institutions will pay 350p-390p a share, with a first instalment of 200p.The Government has loaded the offer with goodies to offset the anti-privatisation campaigns by Labour and other opponents of the sale.This makes the return in the first year highly attractive, especially to private investors, with advisers pointing out that the annualised yield up to February next year when the interim dividend is to be paid works out at 25 per cent for retail investors eligible for a discount.This comprises a final dividend in the autumn to be paid out of last year's profits - made while in the public sector - the interim dividend in February and the 10p-a-share discount on the first instalment. They are in a real muddle on this one."The Government is to sell 100 per cent of Railtrack - 500 million shares - with the price to be set a fortnight from tomorrow on the basis of a bookbuilding exercise with institutions.Analysts were divided yesterday after seeing the full prospectus, with some saying they were telling their clients to wait until after the sale to buy in the market and others recommending purchase even at the top end of the expected price range.Retail investors will be offered a 10p discount on the first instalment, setting their price range at 340p to 380p on the fully-paid shares and 190p on the first instalment - a pounds 20 discount on the minimum investment of 200 shares. The Government announced yesterday that it expected Railtrack to fetch between pounds 1.75bn and pounds 1.95bn as Clare Short, the Labour shadow transport secretary, labelled the sale an "act of vandalism" and Jimmy Knapp, leader of the RMT rail union, called it "a rip-off".
The Liberal leader, Paddy Ashdown, said: "The Government has undervalued the railways." But Sir George Young, the transport secretary, said "some of our critics spend half their time saying we are giving it away and the other half saying don't touch the shares. Thanks to the terms of a government golden share all other shareholders are restricted to 15 per cent stakes, limiting the prospect that any Olayan holding might be the prelude to further corporate activity.. A record 500,000 potential investors registered in the seven days up to Monday night for the Railtrack share sale, a bigger final week rush than in any other privatisation. Christopher Collins, vice- chairman, described as pure coincidence the appointment of Niven Duncan, a former chairman-designate of Eastern Group, Hanson's electricity distribution subsidiary, as a consultant to the Olayan Group.He confirmed that Hanson retained no economic interest in the Grid shares and denied speculation that the company had struck any so-called contracts for difference with James Capel, which would allow it to participate in any uplift in the value of the shares without actually owning them.As the owner of a regional electricity company, Hanson is prohibited from owning more than 1 per cent of the shares.
It is also trying to contact the company to clarify its position.John Uttley, finance director, said: "We always welcome long-term shareholders - wherever they may be It's always nice not to have all your eggs in one basket. I don't think, in itself, it gives rise to concern."Meanwhile Hanson reiterated the fact that as far as it was concerned it had sold the stake and retained no interest. A spokesman for Olayan Europe in London also refused to add anything to the Capel statement.Further information about the Saudi businessman emerged yesterday. Awarded the KBE in 1987 by the Queen, he has also been honoured by King Carlos of Spain and King Carl Gustaf of Sweden.His 49-year-old company operates more than 30 businesses and financial enterprises in the Middle East and around the world.The National Grid said yesterday it had issued a further 212 notice to the Olayan Group and expected to hear from the company today. It also remained in the dark over the intentions of Suliman Olayan, the Saudi billionaire understood to be underwriting the acquisition of the shares. A spokesman for the Grid said it had sent out demands for information, known as 212 notices, to James Capel and Hanson on Tuesday. The return of those notices yesterday confirmed that Capel was the beneficial owner of a 12.2 per cent stake in the Grid.Capel would not elaborate on its statement on Tuesday that it had entered into a "structured transaction" with a subsidiary of the Olayan Group to hedge the risk of holding the shares. The National Grid failed yesterday in its bid to clarify the intentions of James Capel, the HSBC-owned broker that became the electricity transmission company's largest shareholder with the acquisition on Tuesday of Hanson's 12.5 per cent stake.
