Gandalf Technologies Inc chief executive James Bailey rode into town yesterday to try and pursuade a sceptical City and Press that his company’s bid for Case Group Plc is credible. The basis of the share offer is unchanged: 320 pence cash plus one new Gandalf share for every eight Case shares held. This equation now values each Case share at 91 pence compared to the 84 pence evaluation when the bid was first announced on May 24 (CI No 936), following a hike in Gandalf’s share price on the Toronto Stock Exchange. Analysts’ verdicts on this offer vary from thin to fair. One firm of brokers in the former camp reckons that Case shareholders would be prepared to taken out if the premium were half as much again. Bailey countered that the offer is very reasonable, and says he sees no problem in the fact that part of the offer is in paper, given that Gandalf will be trading on the London Stock Exchange from next Monday – but Case holders who are disenchanted with the stock want to get out of the sector altogether and are unlikely to find the prospect of Gandalf’s paper much more attractive than their Case shares. Bailey offered no new arguments but reiterated the old vociferously. They are that senior management in Case lacks the expertise and vision to succeed and that the two companies are a natural fit, in geography and products. He cited Case’s troubled 1985 acquisition of US company Rixon, which he says has drained company resources ever since, as evidence of this ineptitude, although analysts point out that Gandalf has far from made a successful penetration of the US market itself. Case volleyed that Gandalf’s document to shareholders is beautifully glossy but extremely misleading and warned that its silence throughout the proceedings to date is soon to turn to spirited defence: We are keeping our powder dry until we see the whites of their eyes affirmed a company spokesman. Its sustained hostility rules out any hope that may be lingering in the Gandalf camp of a friendly merger and also raises questions of how Gandalf will set about the task of reorganising the – by then thoroughly disaffected management of Case, if its offer were to succeed.
