Watchdog quiz over Halfords float

THE Takeover Panel was involved in last-minute talks with private equity firm CVC Partners and investment bank Citigroup last week, 24 hours before the flotation of cycle and motor spares chain Halfords.

It emerged that together, they would hold more than 39.9% of the shares.

The panel was considering whether CVC and Citigroup, through subsidiary Citicorp Capital Investors, were acting together - known in the City as 'in concert' - and had breached the Takeover Code.

If the Panel had ruled that a breach had taken place, it could have forced CVC and Citigroup to make a cash offer for Halfords, which floated on Thursday, at the highest share price in the first day of trading.

Halfords was valued at more than £600 million, marking the biggest retail flotation in almost two years. It was priced at 260p a share, towards the bottom end of the predicted range of 250p to 300p, and closed at 264 1/2p on Friday.

Though City bankers tried to play down the significance of the Takeover Panel's inquiries, describing them as 'technical', it is believed that there was 'general pandemonium' within one of the firms after it was summoned to a meeting on Wednesday, the day before the float. One said later: 'Everything has been resolved. The panel has been notified and ruled that we did nothing wrong.'

A final prospectus, released on Thursday, revealed that Citicorp Capital Investors held 5.8% of Halfords on flotation, assuming that an option for an additional raft of shares was not taken up. CVC held 36.4% in three separate funds.

Citigroup, which owns Citicorp Capital Investors, also acted as adviser to the sale.

CVC Partners bought Halfords, now led by David Hamid, from Boots two years ago in a £472 million deal.