Chamberlain Phipps valued at pounds 74m: Chairman selling pounds 6m worth of shares as company returns to market listing

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The Independent Online
CHAMBERLAIN Phipps, the shoemakers' supplier, will be valued at pounds 74m when it returns to the stock market later this month. Chamberlain dropped off the official list in 1989 when Evode, the glue maker, bought it.

Dan Sullivan, chairman, is selling shares worth pounds 6m in the issue. His stake in the business will decline from 50 to 25 per cent. He said his pounds 6m was equivalent to the amount of money he had invested in the company since he led a management buyout in 1992.

Shares are being placed at 165p. Mr Sullivan's remaining 25 per cent holding in Chamberlain will be worth pounds 18.4m at the placing price. Legal & General Ventures, the venture capital provider, backed the buyout. It is reducing its holding from 47 to 21 per cent.

The company will receive pounds 27m in the share placing, most of which will be used to repay debt.

Debt gearing following the placing will be 65 per cent. However, Jim Dale, finance director, said gearing would fall to 30-35 per cent by the end of the financial year, leaving the company free to make modest bolt-on acquisitions.

Chamberlain has operations in Britain, France and Canada. In the year to last April it had sales of pounds 137m and made operating profits of pounds 11.6m. The overall profit margin is 8.5 per cent but Mr Sullivan said he thought group-wide margins could increase to 10 per cent.

Chamberlain was acquired by Evode in a hotly contested bid battle against Bowater, the packaging group. The business bought by Evode included adhesives as well as shoemaking materials. In the 1992 buyout Evode retained Chamberlain's glues operation but sold the shoe parts side to the management team. The pounds 74m valuation for the new Chamberlain is the price Evode paid for the larger group in 1989.

The placing price equals 10.6 times Chamberlain's earnings per share, about 30 per cent below the average market price/earnings ratio and conservative compared with other recent issues.

Chamberlain said it would have paid a dividend of 7.3p last year had it been quoted. The notional yield is 5.5 per cent compared with a market average of 3.8 per cent.

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