Zeneca rights are 85% taken up

SHARES in Zeneca rose 11p to 629p yesterday after the drugs company demerged from ICI reported an 85 per cent take-up of its pounds 1.31bn rights issue.

City observers said the result was a relief for the market as the issue was by far the largest the City had seen for some time and the drugs sector was currently unpopular.

Analysts also said the relative success of the fund-raising exercise augured well for the third BT share sale, also led by SG Warburg, due shortly.

There had been concern that the Zeneca issue, priced at 600p, might flop when the shares, which started trading at 682p, fell back to 609p earlier this month. The price was hit by worries about US healthcare reform and a trend among investors towards more cyclical stocks.

There was also concern that private investors, who held about a quarter of the shares, would not take up their rights in large numbers.

Zeneca was formally split from ICI at the beginning of the month and comprises the industrial giant's drugs and agrochemicals businesses.

The rights issue was designed to ensure the adequate capitalisation of both Zeneca and the remainder of ICI. Most of the proceeds will go to ICI, while Zeneca will be left with borrowings of pounds 391m, or 26 per cent of shareholders' funds.

Sir Denys Henderson, chairman of both Zeneca and ICI, said he was delighted with the level of interest and pleased with the smoothness with which the money had been raised.

'Now, with the rights issue successfully away, the two new companies can begin their independent lives with sound capital structures,' he said.

Zeneca shares closed at 626p, 8p higher on the day. ICI shares fell 101 2 p to 6901 2 p.