Two Waterford directors buy Doulton shares

Waterford Wedgwood directors Sir Anthony O'Reilly and his brother-in-law, Mr Peter Goulandris, have sparked takeover speculation on the London market by, between them, taking a 3.3 per cent holding in Royal Doulton.

Waterford Wedgwood, where Sir Anthony is chairman and Mr Goulandris is deputy chairman, owns 21.16 per cent of Royal Doulton.

A Waterford Wedgwood spokesman said he could not comment because the shares had been bought in a personal capacity by the two directors. Sir Anthony and Mr Goulandris control 26 per cent of Waterford.

In a statement to the London Stock Exchange yesterday, Stoke-based Royal Doulton said Sir Anthony had bought 9.5 million shares, while Mr Goulandris had purchased 1.25 million shares.

Mr Goulandris's purchase, costing some £108,000 sterling (€157,000), was made through Cantique Holdings. Sir Anthony spent some £825,000 on his part of the transaction. Royal Doulton shares closed at 9p sterling in London last night, up 6 per cent on the day.

The company's share price has tripled over the past four months, with market watchers repeatedly raising the possibility that it could become a takeover target.

The firm's extensive property portfolio has been cited as a particular attraction for buyers.

There is no indication that the Royal Doulton purchases represent anything more than an investment for Sir Anthony and Mr Goulandris, but their position will fuel talk of a possible takeover.

The company would be worth more to the two businessmen than a mere property play, with the removal of Royal Doulton from a crowded giftware market likely to offer a considerable fillip to Waterford, which has experienced some financial problems.

The chances of the pair spending their own money for the wider benefit of Waterford's shareholders appears remote, with a trade takeover more likely.

Royal Doulton has been struggling for a number of years, as demand for its traditional ceramics products has declined and cost pressures have grown.

The 200-year-old company cut 1,100 jobs in 2002 and reported a pre-tax loss of £4.9 million sterling for the first half of 2003.

It operates just one UK facility, having moved the rest of its manufacturing to Asia.

Waterford Wedgwood first became involved with Royal Doulton in 1999 when it bought a 14.9 per cent stake at 90p per share. At that time, Waterford said it had no plans to bid for the company unless one of its rivals made such a move.

In 2002, Waterford raised its holding to 21 per cent before attempting to block an emergency rights issue by Royal Doulton, which was in financial difficulties at the time.

The Irish company offered to buy Royal Doulton's flagship Royal Albert brand and to pool some operations.

Royal Doulton's shareholders rejected the proposal and Waterford went on to take up its full allocation under the issue. Waterford is due to issue a trading statement this morning.