SHARES in Burn Stewart closed more than 25% higher yesterday after the whisky company, which in February reported its first pre-tax profit in four years, said it had received a takeover approach from long-time shareholder CL Financial.

CL Financial - the Trinidad parent of bitters and rum group Angostura - has held a substantial stake in Burn Stewart since September 1999. It currently owns 28.3% of the whisky company, which is headquartered in East Kilbride.

Burn Stewart said early yesterday that it had received a potential bid approach, but did not confirm the identity of its suitor until late in the afternoon. By

that time, its shares were 8.75p higher at 43.5p.

''CL Financial have advised the directors of Burn Stewart that they would intend to maintain the activities of the company, and regard Burn Stewart as a platform from which to pursue further international expansion,'' the company said in a statement.

Ian Bankier, managing director, said after the firm's latest results that Burn Stewart was ''thinking down independent lines''. However, a source close to the negotiations yesterday described the agenda as ''positive'', indicating the board may look favourably upon the approach.

''The board will continue to keep its shareholders informed of all significant developments,'' the statement continued. ''In the meantime, they repeat their and their financial adviser's advice to shareholders to take no action in respect of their shareholding.''

One adviser who works with several different companies within the Scottish whisky industry said it was unlikely that any rival bidders would come out of the woodwork.

In addition to CL Financial's already substantial shareholding, he said there were also concerns about the ''aggressive'' valuation Burn Stewart has historically assigned to its maturing stock. Any mid-size rivals taking this on would have to substantially write down the value of these assets, wiping out much of their potential profitability.

Meanwhile, analysts said large players such as Diageo or Allied Domecq would simply not bother with a relatively tiny operation like Burn Stewart, which made a pre-tax profit of (pounds) 12,000 in the first half of this year on sales of (pounds) 20.2m.

''I don't think it's one for the bigger boys,'' said Ann McMahon, an analyst with Seymour Pierce.

It seems likely that any offer from CL Financial would be in the form of cash. Although various businesses within the group are listed in different markets around the world, CL has no UK-listed operations, making a paper transaction difficult.

Alan Gray, whisky analyst with ING Barings Charterhouse, said the price and structure of the deal would be the biggest factor in determining whether a takeover went ahead.

Although CL Financial has a substantial stake, directors of Burn Stewart also own a hefty chunk of about 24%. Gray said although price would be paramount, a deal that included keeping on the management team could also hold sway.

William Thornton, executive chairman of Burn Stewart, owns approximately 12.5 million shares, equal to about 20% of the equity. William Walker, director of operations, has about two million shares, while Bankier owns nearly 390,000.

Originally founded in 1948 - making it the last fully-integrated Scotch whisky company to enter the market - the firm was sold to a management buy-in team in 1988. Its shares floated on the London Stock Exchange in 1991 at a price of 140p each, but have in recent years traded below net assets as the company posted heavy financial losses.

Through Angostura, CL Financial acquired an initial 18.2% stake in Burn Stewart in September 1999, paying 45p each for 5.9 million new shares. That (pounds) 2.7m shot in the arm was followed two months later by the purchase of a further 6.9% equity stake, rising eventually to 28.3%.

Burn Stewart has for the last several years been investing about (pounds) 3m annually in its Scottish Leader brand, which last year sold 300,000 cases. More than 100,000 of these are sold in South Africa, making it the third best-selling Scotch brand, followed by significant exports to Taiwan and South Korea.

Also in South Korea, Burn Stewart has a 10-year agreement to provide all the whisky for Scotch Blue International. This brand, owned by Lotte Chilsung, accounts for about 10% of that country's whisky market.

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