Hongkong looks set for failure in Trafalgar offer

HONGKONG LAND's tender offer for 15 per cent of Trafalgar House's shares looked to have failed last night with only a handful of acceptances expected.

An announcement of the take- up will be made on Monday morning, but the indications are that most investors were reluctant to allow Hongkong Land to take effective control without mounting a full bid. Last week, it acquired 14.9 per cent in a dawn raid so a successful tender would have given it a 29.9 per cent stake.

The poor response means Hongkong Land, part of the Jardine Matheson investment group, will be left with a little over 15 per cent and raises questions over how Trafalgar will respond to its request for board representation. Hongkong Land is likely to seek a meeting shortly after the announcement on take-up. The signs are that Trafalgar will only agree to a board seat if Hongkong takes its stake above 20 per cent. But Hongkong is likely to argue that its international connections could add value and that its ability to snap up 14.9 per cent underlines institutional dissatisfaction with the group.

Henry and Simon Keswick, the brothers behind the Jardine Matheson group, chair many of the companies in the empire - including Hongkong Land. But Hongkong may also be considering Sir Charles Powell, a former foreign affairs adviser to the Thatcher government who joined Jardine's board early this year, as a candidate for Trafalgar.

Institutions have been pressing for board changes during the week and some have made it clear that they want Sir Nigel Broackes, Trafalgar's chairman, to step down. But some institutions believe he will insist that Sir Eric Parker goes too. 'I would want to see a non-executive chairman brought in from outside the group,' one shareholder said. 'I want to see them both go.'

Trafalgar's shares closed at 85.5p, down 1p, putting them 0.5p above the tender price. Hongkong can take its stake up to 25 per cent by buying in the market but would have to wait seven days before lifting that to 29.9 per cent. It is, however, likely to have given assurances to sellers in last week's dawn raid that it would not pay more than the 85p offered then.