ICI fertiliser sale blocked but Woodchester purchase given go-ahead .sx Rulings on state-owned bids .sx By Robert Rice , Legal Correspondent .sx ONE takeover bid by a state-owned foreign company was blocked yesterday and one was allowed , in the first test of the UK government's new approach to such bids .sx The proposed acquisition of ICI Fertilisers by Kemira , the Finnish state-owned chemical company , was stopped by Mr Peter Lilley , UK trade and industry secretary .sx His decision follows a report by the Monopolies and Mergers Commission that the acquisition raised significant competition issues and might be expected to operate against the public interest - partly because of Kemira's ownership by the state .sx Separately , Mr Lilley gave the go-ahead to the acquisition by Cr e dit Lyonnais , the French state-owned bank , of a 45 per cent interest in Woodchester Investments , an Irish-based finance company with interests in Britain .sx A monopolies commission investigation had concluded that there was no justification for blocking the deal on competition grounds .sx The secretary of state has no power to act against a merger after such a ruling .sx Last July Mr Lilley said the government would not allow Britain's policy of privatisation and competition to be undermined by " nationalisation by the back door " .sx ICI said yesterday the decision would further weaken the UK fertiliser industry .sx Kemira said the monopolies commission's fears for competition in the UK fertiliser market were " wholly misplaced " and that the decision would hurt UK output and jobs .sx The commission concluded that the acquisition would lead to significantly less competition in the UK market .sx The number of manufacturers would drop from three to two :sx Kemira and the Norwegian-owned Hydro Fertilisers , with two thirds of the market between them .sx Other suppliers had small shares and there was little prospect of new entrants .sx The commission said Kemira's state ownership could worsen the merger's harmful effects .sx State ownership might enable Kemira to withstand downturns in the market better than a private-sector company and could allow it to keep prices down to enhance its dominant position .sx The commission said that even if ICI withdrew from the market , the resulting unemployment and loss of domestic production would not outweigh the merger's effects on competition .sx Woodchester issued a statement yesterday welcoming Mr Lilley's decision to approve Cr e dit Lyonnais's addition to its existing 29.8 per cent holding .sx The commission said that the French state could intervene in Cr e dit Lyonnais's business but that in practice it gave management a high degree of independence .sx Given each company's small share of the UK financial services market , the commission did not believe that the merger would allow Cr e dit Lyonnais to distort the market .sx ICI may have to withdraw from UK fertilisers .sx By Clive Cookson .sx ICI , the leading UK chemical company , is contemplating the complete closure of its domestic fertiliser business , with sales of pounds450m a year , following the government's decision not to allow Kemira of Finland to buy it .sx In a statement last night , the company said " ICI must now consider all its options " for the fertiliser business , which has lost a total of about pounds50m over the last five years .sx The most likely option , according to ICI's evidence to the Monopolies and Mergers Commission , would be to shut down the business if the bid were blocked .sx That would lead to the loss of 540 jobs at ICI's Severnside and Leith fertiliser plants , which would have been taken over by Kemira , and to an increase of pounds60m a year in UK fertiliser imports .sx ( ICI's third fertiliser plant , at Billingham , was not part of the proposed takeover and is scheduled to close in any case , with the loss of 640 jobs .sx ) .sx Norsk Hydro , Europe's largest fertiliser manufacturer , told the Monopolies Commission that " it too had made a bid for ICI's fertiliser assets and would still be interested if Kemira's proposal did not go ahead " .sx But Hydro's share of the UK fertiliser market ( 19 per cent ) is similar to Kemira's ( 18 per cent ) and it too is a state-controlled company , so the same objections might apply if ICI agreed to sell the business to the Norwegian company .sx While ICI considers its options , " it will continue to produce fertilisers at its Billingam , Leith and Severnside sites .sx .. and to supply these products to farmers , " the company says .sx The short-term commercial outlook for ICI Fertilisers may have improved with the Gulf crisis because Kuwait , Iraq and some of the Gulf states are significant exporters of fertilisers .sx The crisis has driven up world fertiliser prices without affecting significantly the cost of raw materials ( natural gas and inorganic materials) .sx Senior ICI executives including Sir Denys Henderson , chairman , were genuinely surprised - and infuriated - by yesterday's announcement , according to sources in ICI .sx They say the board will seriously consider closing the UK fertiliser business .sx The Commission's report says that in January 1990 , when the board considered the various options for ICI Fertilisers and decided to sell it , " continuation of the current mode of operation was seen as the best fall-back option , if satisfactory divestment did not prove possible , since the business was forecast to generate a positive cash flow for a number of years forward " .sx Saatchi urged by big investor to change refinancing terms .sx By Alice Rawsthorn .sx SAATCHI & SAATCHI , the troubled advertising group , is under pressure from one of its largest bondholders to change the terms of its controversial financial rescue package .sx ESL Partners , a Dallas-based investment company holding 17 per cent of Saatchi's Euro - preference stock , is lobbying the company , through its advisers SG Warburg in London and Donaldson Lufkin Jenrette in New York , to renegotiate the package .sx Earlier this week , Warburg met representatives of Lord Rothschild , whose funds hold 20 per cent of the Europreference stock .sx Rothschild is understood to be dissatisfied with the present terms and may table alternative proposals .sx Given that Saatchi needs to secure the approval of 51 per cent of all bondholders - and of 67 per cent of those voting - the combined votes of ESL and Rothschild would be enough to block the refinancing .sx This means they are in a strong position to persuade Saatchi to change the package .sx Mr Edward Lampert , general partner of ESL , said the current terms of the refinancing were " unacceptable " but that he was convinced it would be possible to produce " a better alternative for the company and its investors " .sx ESL is discussing alternatives with Warburg and Donaldson .sx Mr Lampert said :sx " Saatchi is a great company .sx We want to make sure it not just survives but thrives .sx Its advisers are creative and constructive people .sx I am sure they can come up with a structure which would be better for the company .sx " .sx The crux of the bondholders' complaints is that under the terms of the refinancing - in which they swap bonds for a combination of new ordinary and Europreference shares - they will receive too low a proportion of the enlarged equity and will forfeit their dividend income .sx Saatchi and its advisers have argued that , although it would be technically possible to vary the terms of the refinancing , the present proposals are the fairest possible package for all classes of shareholders .sx Unless Saatchi restructures its finances it will almost certainly go bankrupt when its current banking facilities expire in January 1993 .sx Profits recovery by Porsche .sx By Andrew Fisher in Stuttgart .sx PORSCHE , the German luxury sports car manufacturer , continued to recover in the year ended July , 1990 , with a 26 per cent rise in net profits to DM68 .sx 4m ( $45m) .sx However , it would only commit itself to a forecast of maintained sales and " satisfactory results " for the present 12 months .sx As well as expressing concern about the possible consequences of the Gulf war , Mr Arno Bohn , the chief executive , said the weak dollar , now worth around DM1 .sx 50 , was a considerable burden and danger for Germany's export-oriented industry .sx Porsche was making more of its purchases on a dollar basis , mainly of tyres , leather , castings , and plastics .sx He said business was still favourable in Germany , continental Europe , and Japan .sx Sales , however , were suffering from economic weakness in the US , Canada , the UK , and Australia .sx The new luxury car tax in the US was an extra burden for Porsche .sx Last year's result still leaves Porsche well below the peak DM120m of 1984-85 , before its sales were hit by the 1987 stock market crash and the weakening dollar .sx But the company has recovered considerably since earnings slumped in 1987-88 to DM25m after a sharp drop in the previous year which had prompted Porsche to cut the dividend by DM5 a share .sx Having restored DM1 of the cut last year , it is now adding a further DM1 to bring the payment on the quoted preference shares up to DM13 and that on the voting stock - owned by the controlling Porsche and Pi e-trema ch families - up to DM12 for last year .sx When Porsche ran into difficulties , nearly 70 per cent of its sales were in the US ; last year , the US share was down to 25 per cent .sx The company , which has upgraded its models and cut production and costs sharply in recent years , lifted turnover 20.5 per cent to DM3 .sx 05bn. Mr Arno Bohn , the chief executive , said that turnover for 1990-91 was expected to be about DM3bn .sx Porsche benefited last year from the strong economy in Germany and a rise of 45 per cent in export markets outside the US .sx Sales in the US fell 15 per cent .sx The company said 70 per cent of its car turnover was achieved abroad against 76 per cent the previous year .sx In east Germany , 600 Porsches were registered in 1990 , around 100 of them new .sx Total production was 32,360 cars , a rise of 7 per cent .sx Prudential sells estate agencies to Woolwich .sx By David Barchard .sx WOOLWICH , the third-largest UK building society , is to buy 191 estate agency branches from Prudential Property Services .sx The purchase will give Woolwich a network of more than 400 branches .sx Mr Donald Kirkham , chief executive of Woolwich , said the society was getting a bargain by buying the Thames and Eastern regions of Prudential Property Services for pounds20 .sx 75m. The agencies were placed on the market last November when Prudential , once the largest estate agency network in the UK , decided to sell its remaining 500 branches .sx Prudential paid an average of pounds250,000 for each of the 830 branches it purchased at a total cost of more than pounds230m .sx However , the chain was hard hit by the downturn in the housing market after 1988 .sx In 1989 , it reported a loss of pounds48 .sx 9m. Woolwich , which entered the estate agency business only three years ago , now ranks eighth with a network larger than that of Abbey National and only slightly smaller than that of Black Horse .sx The deal implies a cost to Woolwich of about pounds113,000 per branch , well below the pounds140,000 it takes to start a new one .sx Woolwich has written off only pounds19m on goodwill in its purchase of the entire network , unlike competitors such as Halifax and Nationwide Anglia which entered the market earlier .sx The purchase reflects Woolwich's policy of increasing its distribution outlets in the high street .sx " With our building society branches , we now have 1,000 outlets , " Mr Kirkham said .sx Morgan Grenfell , the City merchant bank , acted as advisers to Woolwich on the deal .sx The purchase consists of 260 business units and includes the lettings , survey , and valuation , operations of Prudential Property Services , as well as its development , and planning services in the two regions .sx There is an overlap of only 14 branches between Woolwich's existing estate agency network and those being bought from Prudential .sx Mr Richard Groom , Woolwich Property Services managing director , said his company is considering reviving the original names of some of the local agencies .sx Prudential's decision to impose a standard corporate branding and management style on its estate agencies is widely cited as one of the reasons for the network's poor performance .sx Bardon , Evered to merge in pounds87m deal .sx By Andrew Taylor .sx EVERED and Bardon Group are to merge , creating one of the UK's largest quarrying companies .sx Evered yesterday made an agreed share offer for Bardon worth pounds87m at last night's closing prices .sx Mr Roy Kettle , Evered's chief executive , said the deal would make the group the fourth or fifth largest aggregates producer in the UK , controlling about 6 per cent of market .sx 5