Smash hit

The Takeover Panel has now told Sir Gerry that he must put up or shut up by the middle of next month, but, even if he decides that the latter is his only option, Rentokil shareholders will be left with a bill that could top £20 million. The war may be phoney but the company cannot risk not having a battalion of highly paid advisers around.

Although only one major shareholder has come out publicly in support of Sir Gerry’s audacious ploy, that investor alone has the necessary weight to summon the extraordinary general meeting that has been threatened. If he believed that there was sufficient investor support for substituting him for Brian McGowan, the chairman, and Mr Flynn, the meeting would provide a possible route.

But increasingly it looks as if Sir Gerry is coming to the view that Rentokil investors are not interested in such an expensive management change but would like to be made a proper offer for their shares. Hence it seems that the former Granada chief has been talking to a few hedge fund managers to see if they would be interested in putting up some cash to back a bid.

If he takes that route, he can expect a fight. Rentokil has underperformed for several years but is not beyond repair. If Sir Gerry has to put a price on the business, he can expect Mr Flynn to fight for a generous one that takes into account the future prospects rather than the past.

He might have more success in preserving the independence of the company than looks likely for Mr Lerwill. But in the meantime, the phoney bid is an expensive and unwanted distraction.

Will Mack avoid the flak?

THE tensions that broke out publicly at Morgan Stanley this year have not been entirely erased with the payment of $178 million to see off Philip Purcell, the former chairman, and some of his henchmen.

As yesterday’s third-quarter figures revealed, the firm’s investment banking franchise has held up remarkably well, considering the turmoil that Morgan Stanley has been through. Yet John Mack, the new chairman, must be wondering whether the group structure is the one that he wants to take forward.

On the strength of yesterday’s numbers, the perceived friction between the “white shoes”, the Morgan Stanley Wall Street investment bankers, and the “white socks”, the Dean Witter retail brokerage and attached Discover credit card unit, from which Mr Purcell hailed, will be nowhere near abating. Although its revenues were up, the brokerage underperformed rivals. Discover had a tough time, with its profits down by almost 30 per cent, even though sales volume was up by a tenth.

Mr Mack has said that Discover is not for sale, but he is now likely to come under renewed pressure to be rid of the business. Instead, he is taking a $1 billion charge for extricating the bank from its aircraft-leasing business. It may need more than that to restore enthusiasm for the company’s shares, which slipped again on the results. The gang of Grumpy Old Men who forced out Mr Purcell may not have gone into permanent retirement.

• SOME people really believe that luck is on their side. When they receive a letter telling them that they have just been allotted a new Ferrari in a prize draw they do not recall entering, or that a fortnight’s holiday in the sun is waiting for them, they delightedly pick up the telephone. All they get is a hefty telephone bill. Now the Office of Fair Trading is launching a Scams Enforcement Group to try to protect the naive from such disappointments. If everyone who has been conned confesses, it will have a very heavy workload.

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