Wellcome heads for success

WELLCOME shares are likely to be sold at around 810p, a small discount to Friday's stock market close, following last night's meeting of Wellcome Trust directors. The issue may also be scaled back from the 330 million shares on offer to slightly less than 300 million.

On these terms, the issue would be judged a success and greeted with relief by an otherwise demoralised stock market. At pounds 2.8bn, it is the largest secondary share issue attempted by a private company.

Investors are believed to have bid for more than 330 million shares as buying interest picked up strongly towards the end of last week. Traders believe that if Wellcome Trust set the strike price at 800p, it could sell the entire offering. Throughout the issue period, however, advisers have warned that the price may be set higher, with the number of shares sold being scaled back accordingly. Private investors have subscribed for more than 100 million shares.

The share sale closed at 5pm on Friday after healthy demand from institutional investors in the UK and in the US. The bids were being screened and sorted into the early hours of yesterday morning by staff at Robert Fleming, the merchant bank co-ordinating the issue.

The board of Wellcome Trust met yesterday evening to consider how many shares to sell, the price and the allocations. It will make its final decision today and the shares will begin trading tomorrow morning.

Market sources suggested that British institutions had put in bids for more than the target of 150 million shares, at prices between 800p and 820p. That compares with Wellcome's 826p stock market price on Friday after a fall of 4p. The shares have dropped 13 per cent since the issue was announced in June.

There was considerable relief that buying interest in the US, where a quarter of the issue is being sold, appeared to hold up well. Robert Fleming had feared that a lack of interest in the US could scupper the issue, as it did the abortive GPA share sale a month ago.

'My suspicion is that all 80 million shares being offered in the States have been placed,' a market source in New York said. 'The price at which people were offering to buy the shares seems to have been around 800p.'

The offer is structured as a book-building exercise, under which investors tell Robert Flemming how many shares they want and at what price. Wellcome said last week that it would not accept offers of less than 800p.