Investors target Norish as 10% of shares snapped up

Irish corporate raider Dr John Teeling has turned his sights on the Dublin-listed but UK-based cold storage and warehousing group Norish, and snapped up a near 5 per cent stake in the group this week at a cost of €193,000 (£151,968).

And in a separate move, the former stockbroker with Goodbody Stockbrokers, Mr Tom Cunningham, has also bought more than 5 per cent of Norish while an Irish investment company, Kappa Alpha, has increased its stake from 3 per cent to 5.4 per cent.

Kappa Alpha is understood to be an investment company with links to some of Goodbody's high net worth private clients.

A spokesman for Dr Teeling would not comment on whether this week's investment was the first stage of a stakebuilding operation.

He said, however, that Norish shares were a good value investment given their 75 per cent fall over the past year as a result of the foot-and-mouth outbreak in the UK and were currently trading at a huge discount to book value.

He said that Dr Teeling and Mr Cunningham had broadly similar investment views and took advantage of a large block of shares that came on the market from the biggest shareholder in Norish, Scottish Provident.

Scottish Provident's stake in Norish has fallen from 12.7 per cent to less than 3.9 per cent, according to a disclosure made to the Stock Exchange while Standard Life has also sold a smaller block of shares.

But Dr Teeling's history is not one of passive investment, and his investment in Norish will inevitably lead to speculation that he is heading a group of investors who may bid for Norish and then break up the company for a profit.

Market sources said Norish at its current price was an obvious target for a classic break-up bid.

At €0.55, the company is valued at just €5 million while company brokers estimate the group's net book value at end-2001 at €1.63 a share or €13.8 million.

Davy estimates, however, that Norish had end-2001 debt of €6.7 million so any bidder will have to bear the balance sheet in mind when doing its sums.

In the past year, Norish - whose cold storage and warehousing business is now exclusively based in the UK - has seen its shares tumble from a high of €1.30 to a low of €0.42 before yesterday's close of €0.48. The foot-and-mouth outbreak had a devastating effect on the group's business and Davy is forecasting a loss last year of €200,000 against a €3.2 million profit in 2000.