Shares see-saw after Rock news

Nov 27 2007 by Chris Knox, The Journal

AS has frequently been the case in recent weeks, Northern Rock dominated news headlines as the consortium led by Virgin was named as the preferred bidder after winning favour with both Northern Rock and the Government.

Its shares initially plunged 18% on the news that the implied value of the group was just £250m as opposed to its current valuation of £360m.

The consortium has said that on completion of the transaction, it would repay £11bn of Northern Rock’s loan from the Bank of England. Additionally, £1.3bn would be injected into the group and Virgin Money would be merged into the business. It is understood half the money would come from the consortium and the rest raised through an offer to shareholders to buy new shares for 25p each.

The consortium says Northern Rock Foundation would continue to participate in the profits of the company. Despite starting the day sharply lower, Northern Rock shares closed 28% up at 110p.

Elsewhere in the regional portfolio, building services group Northern Bear announced interim results for the six months to September 30. Pre-tax profits were £1,008m compared with a previous profit of £83,000.

Chairman Jon Pither said the results reflected the very considerable development of the business. The results included contributions from Chirmarn and Hastie D Burton, two acquisitions made during the period.

The board of Northern Bear also took the opportunity to announce a maiden interim dividend of 1p a share 12 months earlier than planned. After the announcement of the acquisition of Yorkshire-based Jennings Roofing, Mr Pither said: “We expect to continue with our acquisition policy during the second half of the year and have prospective targets in mind.”

The shares ended the day 3.4% higher at 121p.

Fiona Erdozain Fiona.erdozain@wise-speke.co.uk