The use of deeply discounted rights issues to fund large acquisitions is likely to be resisted by investment bankers.
There was speculation that Pearson's move last week could start a trend. The media group, led by Marjorie Scardino, launched a £1.7bn (𔚺.7bn) rights issue on the basis of three for 11 at a discount of 50% in order to support its acquisition of the US-based National Computer Systems. It is to be jointly underwritten up to a limit of £1.5bn by Goldman Sachs and Cazenove.