Market report
CUSTOS
The Board of Trade's decision to refer the pro- posed mergers between Unilever and Allied Breweries and between Rank and De La Roe to the Monopolies Commission could have a profound impact upon the equity market. The reference is being made because the Govern- ment is unsure whether conglomerates—com- panies with a wide variety of interests—are in the national interest. In this HMG shares doubts which have already been expressed by the us authorities. But the point for the market is this: share prices have been pushed up and up partly because of the unprecedented number at
mergers which have been announced over the past twelve months, resulting in almost every case in a higher price for the victim (or grate- ful recipient) than it could have commanded in any other circumstances. The Board of Trade's decision now suggests that the only mergers which can proceed without inquiry will be those which unite neither the very similar nor the totally dissimilar. Of course the Monopolies Commission may decide to let both the Unilever/Allied Breweries and Rank/De La Rue proposals stand, but we shall have to wait four months for the decision. Meanwhile I can see the impulse to merge evaporating rather sharply and share prices moving lower.
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