Bottom Line: All change at the conglomerates

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The Independent Online
INCHCAPE and Berisford International want to be but are not. BTR and Tomkins are, but are not keen on the name. Opinions vary, but from the investor's point of view the conglomerate fell markedly out of favour for most of 1993.

A host of reasons lay behind this. In a relatively slow growth, less volatile, low-inflation environment a company focused on a few operations looked better equipped to investors than one sprawled across many sectors.

On top of the new economic conditions a strong bull market run has also reduced the chances of spectacular, Eighties-style asset break-ups.

The wrath of David Tweedie and the Accounting Standards Board now looms, ready to outlaw acquisition provisioning and other creative accounting techniques designed to flatter if not, in most cases, to deceive.

The conglomerates have reacted. Although boosting its existing chemical interests with the purchase of Quantum of the US, Hanson has made big US disposals, packaged up a clutch of companies for an Electra management buyout, and is soon to float Beazer, probably for pounds 500m.

Williams and BTR, too, are still buying, but Williams is selling its least attractive businesses and BTR is steadily shedding non-manufacturing and other peripheral interests such as the 59 per cent of Hawker Siddeley Canada it intends to float for perhaps pounds 60m.

This is helping BTR to de-gear and recover some of its 25 per cent under-performance of the market since August, as are a modest prospective price/earnings ratio of 16, on pounds 1.4bn pre-tax for 1994 and a 4 per cent yield, at 374p, up 9.5p. The acquirers will none the less be back but in closely related areas and financed by debt.

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