VSEL's 5 interim rise adds spice to takeover

THE SUBMARINE maker VSEL, which has recommended a pounds 478m takeover bid from British Aerospace, yesterday turned in half-year profits in line with expectations as BAe released its offer document.

The figures will come under intense scrutiny as Lord Weinstock's GEC continues to weigh up whether to launch a hostile counter-bid.

In the six months to 30 September VSEL saw pre-tax profits rise by 5 per cent to pounds 30.2m on turnover down from pounds 233m to pounds 195m. The interim dividend is being increased to 12p, against 10.5p.

The BAe offer document confirms that Professor Shon Ffowcs Williams is still the largest VSEL boardroom shareholder with 79,039 shares. He will make about pounds 1m from the takeover.

But two other directors are also now significant holders after exercising options late last year. Noel Davies, chairman, who held 500 shares last year, exercised 60,000 options last November at pounds 8 a share and retained 15,000 of them.

Mr Davies will retire after the takeover. His current contract expires on 2 December 1995 and his basic salary is pounds 174,621, up from pounds 170,362.

Anthony Peak, chief executive, owned 7,718 shares until the end of last year, when he exercised 50,000 options at pounds 8 and retained 10,000. He is paid pounds 139,675, up from pounds 136,269, and will continue in the job.

Under the proposed deal BAe is offering 2.727 new ordinary shares for each VSEL share, valuing the latter at pounds 12.60. BAe said the offer represented a premium of 30.2 per cent to the VSEL share price of 968p on 27 September, the day before press speculation about the merger began. There is a full cash alternative of pounds 11.40 per VSEL share, a premium of 18 per cent on the 27 September price.

The City is watching for a move from GEC, which could easily afford to buy VSEL. There has also been speculation that GEC is considering a bid for BAe itself.