UR TV CAST

Time has been called on the shell game, one of the stock market’s more fascinating pastimes. The relentless share slide seems to have destroyed (at least until the bears are again humiliated) what has often been a lucrative exercise for investors. They have usually made a hash of their original business, but are kept alive by offering themselves as vehicles for companies to come to the stock market. Unsurprisingly, in these grim days, the trend is in the other direction, with directors, sick of the investment environment, happy to retreat into the private domain.With burnt-out hi-tech groups, plus specially created vehicles, swelling the shell ranks, there are probably more around than at any time since the immediate post-war years. Then, an array of mining and plantation businesses had their assets in former British Empire lands nationalised and had to look for something new.A shell industry grew and many financiers made a handsome living because a “clean” shell represented a faster, cheaper and – in some ways – more effective way of getting a company to the stock market than more orthodox routes, with all their fees for lawyers’ and accountants’ services. It was a seemingly foolproof exercise: the shell arranged to buy a successful company by issuing enough shares to give the new company’s owners control.Until now. Last week a clear sign that the shell game had reached endgame showed The takeover fodder disappeared.

Paramount, an old pub company with £5m, said it wanted to roll out a takeover bid, astonishingly, for an already quoted company, the Groupe Chez Gerard restaurant chain.It called last orders last year, selling its 150 pubs for £19.6m but retaining its share quote. Debts were cleared, the balance sheet tidied and its capital structure streamlined. Then Paramount hunted unquoted companies to buy.Experienced shell men were enlisted Guy Naggar, a merchant banker, became chairman. Two accountants, Ralph Elman and Norman Summers, and fund manager Christopher Mills joined the board They searched and searched, but failed to bag a deal. Mr Naggar says several reverse takeovers were examined but their valuations were “much too high”.He draws comfort from Paramount’s failure to undertake a deal. Any of the possible acquisitions “would have resulted in a decline in our share price, following the rest of the market” But the shares have not been immune Early this year they were 33p.

At one time Paramount was a constituent of the no pain, no gain portfolio. During its pub days, I picked up the shares at 15p, selling at 25.5p when it became a shell. They are now 18p.The decision to alight on the quoted Chez Gerard is, in a sense, an admission of defeat. It also illustrates what many others and I have been saying for a long time; the stock market slump has thrown up superb bargains.