03 April 1998 14:07 [Source: ICIS news]
LONDON (CNI)--Rumours of a takeover bid for UK group Inspec are probably the result of current "merger mania" in the speciality and fine chemicals sector, analysts told CNI Friday.
Speculation has centred on US company AlliedSignal as a potential bidder, said Michael Eastwood, chemicals analyst with Dresdner Kleinwort Benson, London. "I suspect that there isn't anything in it," he added.
"The issue is really to do with the fine chemicals sector looking attractive in comparison to commodities," he said. "There has been a lot of consolidation in this sector recently and the there could be more." News Thursday of a possible bid for Courtaulds by Akzo Nobel has fired up the market, he added.
"There is an element of merger mania about these rumours," said Colin Isaac, chemical analyst with Morgan Grenfell, London, who added that Inspec shares had hardly moved today. They rose some 6% on Thursday, but many speciality stocks were up around 2-3%.
"As far as Inspec is concerned there are quite a few people who could probably afford it such as Laporte," said Isaac, "although, strategically, there doesn't seem to be much rationale for it". AlliedSignal and Hercules, also of the US, could be potential bidders, he said.
Because of the high activity potential bidders are beginning to examine their acquisition strategy in greater depth, said Isaac. "They are looking for targets which are high margin, with good growth prospects and good technology," he said. "Inspec is not really very focused and these criteria don't really apply."
However, both analysts agreed that Inspec shares are probably underpriced, which could override these considerations. "Inspec shares have been underperforming for a long time," said Isaac. At 13:41 BST (12:41 GMT) Inspec shares were trading at £2.51 ($4.22) on the London stock exchange, down £0.01 on their opening price.
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