BPC joins list of companies abandoning flotation plans: Market volatility and declining share prices force retreat

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The Independent Online
BRITISH Printing Corporation became the latest victim of turbulent stock markets when it announced it was abandoning its flotation, one month after it was proposed.

It joined a growing list of companies that have decided the price investors are prepared to pay is too low to justify going public. Others have been forced to accept lower multiples than they had hoped, or have seen shares drop below the issue price when dealing starts.

So far this year pounds 6bn has been raised, more than in the previous two years. That has absorbed most of the funds earmarked by institutions for smaller companies and has made persuading them to support future issues more difficult.

Among those that have abandoned flotations in the past month are London Capital, the property company, and TeleWest and General Cable, the cable television companies - although the latter two faced a struggle in persuading investors they were worth more than pounds 2bn, given that neither is likely to make profits for some years. Others, such as Redrow and Healthcall, have been valued at multiples below those anticipated when the flotations were announced. Despite that, their shares are trading at below the offer price, as are those of recent issues such as Beazer, Capital Shopping Centres and Chiroscience.

BPC was due to issue its pathfinder prospectus on Friday but said the 'recent market volatility and the general downward movement in the stock market' meant it was postponing the float. .

The company, bought out from the Maxwell empire at the end of the 1980s, was expected to raise up to pounds 150m in the float to repay some of its pounds 170m of debt. The venture capitalists who backed the buyout were also likely to sell some of their stakes. But BPC's high gearing meant small variations in the value of the shares could have a significant impact on the return from their investment.

In the US, General Motors and Sprint confirmed they had abandoned plans to merge GM's Electronic Data Systems division with the telecommunications group, but still hoped for an alliance.

The merger talks, disclosed three weeks ago, would have created a data communications giant with annual revenues of more than dollars 20bn ( pounds 13.3bn). But the talks on the dollar terms of the proposed 'merger of equals' failed due to conflicting valuations of current worth and future contracts.

The combination would have been a complicated one, requiring GM to spin off EDS as an independent entity, whose shares would be controlled by GM's pension fund. EDS - which was sold to GM by the Texas entrepreneur Ross Perot for dollars 2.5bn a decade ago - is currently a wholly-owned GM subsidiary, although investors may speculate on its profits through GM's 'E class' shares.

The car maker said yesterday it would continue to consider spinning off control of EDS to E class shareholders.

A proposed sale to BT last winter collapsed in part because of EDS's complex ownership structure.