There was a further escalation in the battle for control of Fully Listed Crown Sports today, as chairman Jeff Chapman's would-be takeover vehicle Bennelong urged investors to accept its 5p offer, a price the rest of Crown's board dubbed 'derisory'. Elliott Davis reports.

Bennelong, the company set up by Chapman to wrestle control of sports and leisure club operator Crown, believes its offer is reasonable, arguing that it puts the company 'on a prospective p/e of 14.5 times'. According to Bennelong this is at a significant premium to 'Crown's larger and more profitable quoted competitors' who are currently valued 'between 7.6 and 10.8' times earnings.

Bennelong also notes that Crown spent more than £31 million on acquisitions between April and July 2001, yet saw earnings per share fall 45 per cent to 0.17p in the first half of 2002.

Crown's independent directors, however, feel that the offer significantly undervalues the company, owner of several well-known brands including Dragons Health Clubs. Their case is supported by the fact that the share price currently stands at 7p.

In response to Bennelong's latest advance Crown stridently declared that 'shareholders should appreciate that this derisory offer is not about the historic operating performance of Crown, which is a legacy of Mr Chapman's flawed strategy'.

Instead management feels it is far better suited to establishing 'real value for shareholders' and claims currently to be concluding the £14.5 million sale of the company's golf club business 'which alone equates to 5p per Crown Sport share'.

'I am sure shareholders will see the situation as it is' concludes independent director Ray Pearce. 'Mr Chapman has made an offer of 5p, which the market is clearly indicating to be too low. We are talking to serious buyers [for Crown's other businesses] that will, we believe, return a materially higher value to shareholders'.

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