TIGER Management, the American hedge fund group, has sold its entire holding in Jefferson Smurfit at the third attempt.
Davy stockbrokers and UBS yesterday placed the entire 54 million shares about 5 per cent of the total Smurfit equity with overseas and domestic institutions at 147p each, realising just under £80 million for Tiger.
The final sale of the Tiger shareholding will be greeted with relief by Smurfit, although the group has declined to comment on the sale.
The presence of a reluctant shareholder and the previous unwillingness of institutional investors to pay the price sought by Tiger has meant the share price has suffered. Immediately after the Tiger shares were sold yesterday, the share price jumped to 151p with brokers reporting good bid interest at that level.
The sale of Tiger's Smurfit shares at 147p is also a feather in the cap for brokers Davy and UBS, which had previously failed to find enough buyers for a block of shares which Tiger apparently wanted sold completely or not at all.
Subsequently, NCB and NatWest Markets also failed to find enough buyers to pay the price sought by Tiger. The successful sale of the Tiger shares is worth about £500,000 in commissions for Davy and UBS.
Neither of the brokers involved in yesterday's placing would comment on the sale, but it is understood that the bulk of the shares were placed with overseas institutions, including some newcomers to the Smurfit share register.
The willingness of a group of institutions to pay 147p should put a floor on the Smurfit share price which has suffered from the overhanging Tiger holding and the slump in the paper and packaging sector.
"Whether Smurfit shares will recover further now that Tiger has gone remains to be seen but, purely on the basis of price/earnings ratios, the share seems very cheap on a prospective 1996 p/e of 6.7. This is a substantial discount to virtually every other packaging stock on the US market, against which Smurfit is usually compared."
The inability of Smurfit's 46 per cent American associate, JS Corp, to break out of a trading range between $10.50 and $11.50 is one factor retarding an improvement in the share price.
The absence of any further bad news on product prices from the paper and packaging sector and a general improvement on stock markets are two reasons being cited for the willingness of investors to pay 147p per Smurfit share yesterday.
Less than two weeks ago, Tiger pulled a placing at 140p, even though it had buyers for some of its 54 million shares. That decision now seems to have been vindicated.
