Durlacher admits to bid talks

SECURE Trust's broking business Arbuthnot Latham has emerged as the latest possible suitor for mini-investment bank Durlacher following the company's admission today that it is in bid talks.

The market had been awash with rumours since Tuesday when the company's share price jumped 8%. Durlacher shares were suspended this morning and there was no immediate word on the likely bidder.

Stephen Lockley, group finance director at Secure Trust, denied involvement in talks with Durlacher, however, describing reports as 'very wide of the market'.

Simon Hirst, Durlacher's former head of corporate finance, took over from chief executive Christopher Stainforth in December. Hirst is known to have been looking for a tie-up with another small City outfit. Rival broker WH Ireland has also been suggested as a possible bidder.

In a statement to the stock market this morning, Durlacher said the potential acquisition, if successful, would constitute a reverse takeover but there was no guarantee that the early-stage talks would actually result in an agreed transaction. Another rumour, considered less likely following Durlacher's statement, had suggested an Icelandic bank.

Kaupthing Bunadarbanki and Landsbanki were also seen as possible candidates. Created by the 2003 merger of Bunadarbanki and Kaupthing Bank, Kaupthing Bunadarbanki is Iceland's largest bank and already offers a range of investment banking services. Kaupthing and Landsbanki were involved in Baugur's £326m agreed bid for the Big Food Group in December.

Durlacher shares rose from 92½p to 101p on Tuesday and climbed again to 108½p yesterday amid growing speculation of a bid.

Once one of the UK's leading venture capital firms, Durlacher overstretched itself during the dotcom boom. It funded a large number of start-ups but has since moved to focus on fund management and broking.

Even after the latest share price rises the company is valued at just £21.04m, compared with its £2bn peak at the height of the internet boom. The precipitous fall in its value since then makes it distinctly vulnerable to any predator with an interest in expanding its broking operations.