BZW censured over Northern bid affair

BZW, the investment bank, was yesterday censured by the Takeover Panel for failing to disclose the existence of a pounds 250,000 performance fee during its defence of Northern Electric against the hostile bid from CalEnergy last year.

The Panel said it accepted that BZW had not deliberately concealed the fee but said nevertheless that it should have disclosed it.

The existence of the fee came to light in the dying days of the bid, shortly after BZW and Schroders went into the market and bought a 2.6 per cent stake in Northern in an attempt to thwart the pounds 782m takeover.

CalEnergy's advisers immediately complained to the Panel, which took the unusual step of extending the bid, thus allowing CalEnergy to receive enough acceptances from shareholders.

Had the bid closed normally at 60 days then Northern would have escaped takeover by a whisker, with the aid of the shares bought by its advisers.

The Panel executive said it believed there had been "no deliberate concealment" of the fee but criticised BZW for "failing to disclose all relevant facts".

In the event the fee was never paid. The episode provoked a heated debate about whether advisers should be allowed to buy stakes in companies they are defending - a practice which is outlawed in the US.