Report on VSEL bids delayed

BY MARY FAGAN

The Monopolies and Mergers Commission's report on takeover bids by General Electric and British Aerospace for VSEL, the nuclear submarine builder, has been delayed for a month because of the complexity and amount of work involved.

The report was due next Wednesday but Michael Heseltine, President of the Board of Trade, said he has agreed an extension until 12 April following "representations" from the MMC. A spokesman for the MMC said that separate inquiries into each bid are being conducted. "There are a large number of interests and a large numbers of employees affected. We need a month to get it right," he said.

"It does concern the national defence and the defence aspects are paramount. It involves great issues of national importance and an industry which in the recent past has been one of our great export leaders."

VSEL, which has never expressed a preference for either suitor, said that it was "disappointed" at the delay. A spokesman said: "It means the uncertainty continues, but we understand that there is a huge volume of work involved. It does not affect the day to day running of the business."

VSEL's shares fell by 27p to £14.98 yesterday compared with bids before the reference of £14 per share. Shares in GEC, which declined to comment on the extension, rose by 2.5p to 285p and shares in British Aerospace rose by 4p to 476p.

British Aerospace is thought to be frustrated at the delay. BAe will not confirm that it intends to come back with a bid but views VSEL's naval shipbuilding capacity as key to its future as a prime contractor on large projects.

Last year, Sir Bryan Carsberg, director-general of fair trading, said that the £532m bid by GEC should be referred. He said there were no competition grounds for referring BAe's bid but suggested that Mr Heseltine consider "whether the BAe bid raised any wider public interest grounds that justified a reference''. Malcom Rifkind, the Secretary of State for Defence, said he had no objection to the bids on competition grounds.

The reference came in spite of intense lobbying by Lord Weinstock, GEC's chief executive. There is concern that GEC seeks to weaken BAe, which is a potential takeover target.