The Investment Column : Wassall alights on TLG

TLG's shares have been out of favour since a profit warning last September, so yesterday's 13.5p jump to 118.5p should have been met with euphoria by the lighting manufacturer. After all, it is the first time for three months that the shares have been above the 115p at which they were launched in November 1994. But executive chairman Hamish Bryce would probably rather the price strength had not been inspired by the news that Wassall, the acquisitive conglomerate led by emigres from the Hanson empire, had picked up a 4.1 per cent stake.

The official line from Wassall is that this is just a normal investment which the group takes from time to time in the UK. The group has up to pounds 80m to spare at any one time and putting it in the stock market is an alternative to parking it in the overnight money market.

Certainly, the investment is already showing a tidy profit. Having been picked up at 105p a share on Friday, the original pounds 7.86m stake has put on pounds 1m in the space of a weekend. Meanwhile Wassall's own market value went up pounds 14.6m yesterday as its shares added 7.5p to 326p.

One relatively benign view is that Wassall merely wants to put the wind up the TLG management which bought the group out of the old Thorn EMI in 1991. But Wassall needs another big purchase having now effectively sorted out General Cable of the US, picked up for pounds 177m in 1994. That business, expected to chip in 60 per cent of operating profits this year, dominates the group and a UK acquisition would give some balance. Buying TLG now would allow Wassall to capture the gain from any upswing in the lighting group's currently depressed European markets.

In the meantime, assuming profits of around pounds 22m this year, TLG's shares on a forward p/e of 15 look well worth holding, with the Wassall stake giving some protection from the downside.