No pain no gain: Life can be a beach when you play the shell game

Shells are a traditional feature of the stock market. Come boom or slump, there seems to be a readily available shoal of these oddities drifting around, looking for real sustenance to keep them going.

Shells are a traditional feature of the stock market. Come boom or slump, there seems to be a readily available shoal of these oddities drifting around, looking for real sustenance to keep them going.

Today I think there are more of them than at any time since the break-up of the British Empire. Then, many mining and plantation companies were left with little more than cash and a quote when their assets were taken over by newly independent countries flexing their nationalistic muscles.

This time the high-tech burn-out has spawned the abundance. But even without thissudden infusion the shell community would be a sizeable force, able to accommodate any company seeking a speedy, relatively cheap back-door route to the stock market. An ideal shell is a company with cash in the bank, allowable tax losses and little or no trading encumbrances. Size should be largely immaterial, although large companies are not considered. So there is, I'm afraid, no hope for Railtrack to become a shell.

Still, like Railtrack, a shell has often made a mess of its trading operations. But few slide into receivership. Most sell their underperforming trading interests, hanging on to the cash received as they assume their shell state. Some do say returning cash to shareholders might be a better option. But cost and tax influences often weigh against that. Far more rewarding is to be the shell for an unquoted company taken over in exchange for a large chunk of shares. In other words, a reverse take-over.

Even in the present uncertain stock market the shell game is alive and well. This week Andaman, a company that has been round the block a few times, admitted it was in talks that could lead to a reverse takeover. Like so many of these deals, mystery surrounds the identity of the other party. Entrepreneur George Allnut built a 7 per cent stake but did not institute the talks.

And although many of the former dot.com stars are still looking for partners some have been snapped up. Internetaction, once above 500p, became Intelliplus. Shareholders who paid more than three figures for their shares during the internet euphoria. The shares are now 3p. But Intelliplus, a telecom services provider, does have a future; Internetaction, on its own, did not.

Internetaction is a warning to shell punters. There are exceptions but the stock market does not provide free lunches and the terms of a reverse takeover can leave little, if any, reward for shell shareholders. And not all shell deals are long-lasting. The partner company can turn out to be a can of worms. Still, well-known stock market players are shells. Carlton Communications is one, PizzaExpress another.

Shells touting for business also come from all corners of the stock market, brewing, food, leisure, media and mining are jockeying for position. Two leisure shares – Paramount and Perthshire Leisure – are among the more intriguing. Paramount, with a 24.5p share price nearly equating to its £5m-plus cash hoard, became cash-rich when it sold its 150 pubs. It became a shell after Stock Exchange red tape blocked a bid to substantially increase its pub estate. But its complex capital has been tidied and it has put itself on the shell beach. So far, no takers. But Guy Naggar, chairman of the Dawnay Day bank, with his partner, Peter Klimit, has moved in. They were formerly involved with Delyn, a shell that is now Ingenta, a specialist and successful internet publisher.

And there have been intriguing moves at Perthshire. It raised cash by selling assets and has just one for-sale bar left. The financier Laurence Laybourne, whose brother Terence is the Geordie celebrity chef, has a 5.1 per cent shareholding.

As Laurence is believed to have provided the finance for Terence's up-market restaurants, their eating interests may be pumped into Perthshire in exchange for shares. The Perthshire price is around 2p, more or less in line with its cash pile.

Rewards from reverse take-overs are mixed. But in these treacherous days, with a tense and nervous stock market, the shell game does offer light relief, provided any outlay is regarded as sheer speculation.

derek@derekpain.totalserve.co.uk

Sport
Thiago Silva pulls Arjen Robben back to concede a penalty
world cup 2014Brazil 0 Netherlands 3: More misery for hosts as Dutch take third place
Sport
Robin van Persie hands his third-place medal to a supporter
Van Persie gives bronze medal to eccentric fan moments after being handed it by Blatter
News
Ian Thorpe had Rio 2016 in his sights
people
Life and Style
Swimsuit, £245, by Agent Provocateur
fashion

Diving in at the deep end is no excuse for shirking the style stakes

PROMOTED VIDEO
News
scienceScientists have developed a material so dark you can't see it...
News
Monkey business: Serkis is the king of the non-human character performance
peopleFirst Gollum, then King Kong - now the actor is swinging through trees in Dawn of the Planet of the Apes
Arts and Entertainment
Blackman: Landscape of children’s literature does not reflect the cultural diversity of young people
booksMalorie Blackman appeals for a better ethnic mix of authors and characters and the illustrator Quentin Blake comes to the rescue
Voices
Mrs Brown's Boy: D'Movie has been a huge commercial success
voicesWhen it comes to national stereotyping, the Irish know it can pay to play up to outsiders' expectations, says DJ Taylor
Arts and Entertainment
Curtain calls: Madani Younis
theatreMadani Younis wants the neighbourhood to follow his work as closely as his audiences do
Life and Style
Douglas McMaster says the food industry is ‘traumatised’
food + drinkSilo in Brighton will have just six staple dishes on the menu every day, including one meat option, one fish, one vegan, and one 'wild card'
Life and Style
Once a month, waistline watcher Suran steps into a 3D body scanner that maps his body shape and records measurements with pinpoint accuracy
techFrom heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor
Sport
Mario Balotelli, Divock Origi, Loic Remy, Wilfried Bony and Karim Benzema
transfersBony, Benzema and the other transfer targets
News
Soft power: Matthew Barzun
peopleThe US Ambassador to London, Matthew Barzun, holds 'jeans and beer' gigs at his official residence. He says it's all part of the job
Sport
Joe Root and James Anderson celebrate their record-beaking partnership
cricketEngland's last-wicket stand against India rewrites the history books
News
Gavin Maxwell in Sandaig with one of his pet otters
peopleWas the otter man the wildlife champion he appeared to be?
News
Rowsell says: 'Wearing wigs is a way of looking normal. I pick a style and colour and stick to it because I don't want to keep wearing different styles'
peopleThe World Champion cyclist Joanna Rowsell on breaking her collarbone, shattering her teeth - and dealing with alopecia
Finacial products from our partners
Property search
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Information Security Manager (ISO 27001, Accreditation, ITIL)

    £70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...

    Biztalk - outstanding opportunity

    £75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...

    Trade Desk Specialist (FIX, Linux, Windows, Network Security)

    £60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...

    Service Desk Analyst (Windows, Active Directory, ITIL, Reuter)

    £35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...

    Day In a Page

    Iraq crisis: How Saudi Arabia helped Isis take over the north of the country

    How Saudi Arabia helped Isis take over northern Iraq

    A speech by an ex-MI6 boss hints at a plan going back over a decade. In some areas, being Shia is akin to being a Jew in Nazi Germany, says Patrick Cockburn
    The evolution of Andy Serkis: First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes

    The evolution of Andy Serkis

    First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes
    You thought 'Benefits Street' was controversial: Follow-up documentary 'Immigrant Street' has got locals worried

    You thought 'Benefits Street' was controversial...

    Follow-up documentary 'Immigrant Street' has got locals worried
    Refugee children from Central America let down by Washington's high ideals

    Refugee children let down by Washington's high ideals

    Democrats and Republicans refuse to set aside their differences to cope with the influx of desperate Central Americas, says Rupert Cornwell
    Children's books are too white, says Laureate

    Children's books are too white, says Laureate

    Malorie Blackman appeals for a better ethnic mix of authors and characters and the illustrator Quentin Blake comes to the rescue
    Blackest is the new black: Scientists have developed a material so dark that you can't see it...

    Blackest is the new black

    Scientists have developed a material so dark that you can't see it...
    Matthew Barzun: America's diplomatic dude

    Matthew Barzun: America's diplomatic dude

    The US Ambassador to London holds 'jeans and beer' gigs at his official residence – it's all part of the job, he tells Chris Green
    Meet the Quantified Selfers: From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor

    Meet the 'Quantified Selfers'

    From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor
    Madani Younis: Five-star reviews are just the opening act for British theatre's first non-white artistic director

    Five-star reviews are just the opening act for British theatre's first non-white artistic director

    Madani Younis wants the neighbourhood to follow his work as closely as his audiences do
    Mrs Brown and her boys: are they having a laugh?

    Mrs Brown and her boys: are they having a laugh?

    When it comes to national stereotyping, the Irish – among others – know it can pay to play up to outsiders' expectations, says DJ Taylor
    Gavin Maxwell's bitter legacy: Was the otter man the wildlife champion he appeared to be?

    Otter man Gavin Maxwell's bitter legacy

    The aristocrat's eccentric devotion to his pets inspired a generation. But our greatest living nature writer believes his legacy has been quite toxic
    Joanna Rowsell: The World Champion cyclist on breaking her collarbone, shattering her teeth - and dealing with alopecia

    Joanna Rowsell: 'I wear my wig to look normal'

    The World Champion cyclist on breaking her collarbone, shattering her teeth - and dealing with alopecia
    Bill Granger recipes: Our chef gives raw ingredients a lift with his quick marinades

    Bill Granger's quick and delicious marinades

    Our chef's marinades are great for weekend barbecuing, but are also a delicious way of injecting flavour into, and breaking the monotony of, weekday meals
    Germany vs Argentina World Cup 2014 preview: Why Brazilians don't love their neighbours Argentina any more

    Anyone but Argentina – why Brazilians don’t love their neighbours any more

    The hosts will be supporting Germany in today's World Cup final, reports Alex Bellos
    The Open 2014: Time again to ask that major question - can Lee Westwood win at last?

    The Open 2014

    Time again to ask that major question - can Lee Westwood win at last?