Rebel hits quarry bid

REBEL shareholder North Atlantic Value is set to raise the stakes in its battle to stop quarrying company

NAV, which has a 6.9% stake in Ennstone, will call an extraordinary meeting to scupper the deal and is expected to question the true cost of a takeover.

It seems likely to highlight a reported £14.68m pension deficit at Johnston, which as well as its aggregates operation has an engineering arm that makes Saxon fire engines and road sweepers. In several recent aborted takeovers, including that of Marks & Spencer, the size of pension fund deficits has discouraged predators.

Johnston is 51% controlled by the Johnston family, which has pledged its support for Ennstone's £48.3m cash-and-shares offer.

Ennstone, whose chairman is Vaughan McLeod, is expected to sell Johnston's engineering businesses if it wins approval for the deal from its own shareholders at a special meeting on September 1.

But NAV, which is the activist investment vehicle of fund manager JO Hambro Capital Management run by Chris Mills, wants a meeting before then to block the bid. NAV has the support of 9.3% Ennstone investor Mirabaud Investment Management and claims that the bid is just 'empire building' by Ennstone.

It added: 'It would dilute earnings and makes no sense financially at an 81% premium to Johnston's share price before the bid.'

NAV wants to appoint an independent director to the Ennstone board and for the company to conduct a strategic review which could see it put itself up for sale. McLeod has said he will offer to let NAV hold its meeting on the same day as the shareholder meeting in September.