Burton bid nets Innovations bosses pounds 21m

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The Independent Online
JOHN WILLCOCK

Innovations, the company that brings you catalogues in the colour supplements for fascinating little gadgets you never knew you needed, has sold out in a deal which brings its three top directors nearly pounds 21m.

The supplier of such vital household equipment as automatic bread makers, 10-year light bulbs and electronic crossword puzzle solvers has sold up to clothing and furniture retailer Burton for pounds 44.9m.

When asked for a list of gadgets the company markets yesterday, an Innovations spokes- woman sighed wearily and said: "You're going to make fun of us, aren't you? Journalists always do." However, the directors will have the last laugh with this deal. They own 51 per cent of the company, and Burton is buying all their shares at 310p each, more than double the share price three months ago.

The three directors originally received their shares in a 1991 rights issue at 31p - exactly a tenth of Burton's bid price. Innovations' chairman Robin Klein stands to collect nearly pounds 4m for his 1.3 million shares. Managing director Clive Beharrell's 1 million shares are worth just over pounds 3m, while non-executive director Edward Cook will get a stonking pounds 14.6m for his 4.7 million shares.

Analysts said that while the deal looked expensive - Innovations' shares stood at just 212p yesterday morning - any calculations should take into account the company's pounds 18m cash pile.

The City also liked Burton's strategic reasons for the deal. It is acquiring Innovations' systems data bank and know-how in the booming market of direct mail and home selling. Home shopping by cable and the Internet are already established in the US.

"What we're talking about with home shopping is really the opportunity for it in two to three years," said Burton finance director Andrew Higginson. "We see direct mail home shopping as a key growth area in the UK sector. Our core business is continuing to perform well and remains our key focus."

Burton already has 5 million store card customers, while Innovations also has 5 million customers on its data banks. Burton claims that the direct selling operation will not cannibalise the high street stores, but in fact encourage home customers to visit the stores.

Burton is keen to promote its own brands such as Top Shop. An Innovations spokeswoman was keen to stress that it isn't all battery re-chargers and orthopaedic pillows. The company has a wide range of catalogues, including Hawkshead for outdoor clothing. It is also licensed by a number of museums such as the Victoria and Albert to produce their catalogues.

Burton shares finished the day 6.75p up at 151.5p, while Innovations soared, up 101p to 313p.

As well as announcing the deal, Burton said that "better trading" for the 19-week period to 13 July raised group sales by 8.5 per cent from the same period a year earlier. The gross margin for the period is up 2.1 percentage points.

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