P.M. BRIEFING : BAT Shares Fall Amid Talk That Junk Bonds Finance Takeover Bid

Shares of BAT Industries slipped today on talk that the massive $21-billion buyout of the company proposed by Sir James Goldsmith is being financed by junk bonds and may spark opposition from regulators.

After closing up 30% after Tuesday’s announcement, BAT shares fell 23 pence (37 cents) to 8.70 pounds ($14.18) on the London Stock Exchange. In New York, the U.S.-traded shares fell 25 cents to $14.125 on heavy volume.

The sell-off came on fears that British regulatory authorities might launch an investigation into Europe’s largest-ever takeover offer because the bid was cashless, analysts said. A group led by Anglo-French financier Goldsmith said it would offer shareholders loan notes, or junk bonds, that will be repaid by carving up and selling pieces of the huge BAT conglomerate.

BAT, Britain’s third-biggest company, quickly rejected the takeover bid on Tuesday.

The offer marked the first time aggressive finance and break-up strategies pioneered on Wall Street have been used by corporate raiders in the London stock market. Politicians and business leaders expressed fears that the tactics would start a wave of takeover bids for giant companies in Britain and on the Continent.