Electra rejects 'final' offer
Venture capital trust giant 3i, led by Brian Larcombe, is playing it tough and cutting it fine with a 'final' hostile bid of £1.25bn for its big rival, Electra Investment Trust.
It has edged up its earlier tentative offer of 705p a share to 725p in cash and shares.
Electra chief Michael Stod-dart lost no time rejecting the bid as 'inadequate' and its shares registered the stock market's disappointment by staying unmoved at 710p.
The offer looks good compared with Electra's 563.5p when 3i made its approach two months ago.
It looks pale beside the 786p that Electra is offering to pay for 40pc of its shares in a defensive restructuring move.
It claims that is a 'conservative' valuation of stakes in unquoted companies, 85pc of which give control. 'Not conservative enough,' argues 3i, which says its bid offers a small premium on its own valuation of Electra's assets.
It claims Electra's valuation is futuristic and its restructuring proposal will leave shareholders in 'a highly-geared wind-up vehicle' with no further dividends.
By contrast, 3i is offering them immediate cash and a stake in a Footsie company, which has always traded near to net asset value and has outpaced that index since flotation in 1994.
City analysts say it is 'a very finely-balanced situation'.
Shareholders should sit tight and hear out the valuation arguments from both sides before deciding which way to cast their lot.
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