City: Invergordon haunted by spirit of '91

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SHAREHOLDERS who supported Invergordon Distillers' fight for independence a few years back have good reason to feel aggrieved. Two years ago, the rival scotch whisky group Whyte & Mackay, part of the American Brands empire, had 275p a share on the table; today the shares trade at 266p and would certainly be a good deal lower but for the belief among investors that Whyte & Mackay, with 40 per cent of Invergordon, will return with an even higher offer.

That prospect however is looking increasingly unlikely. Invergordon has warned of a profits shortfall this year, and it is now abundantly clear that promises made at the time of the bid were based on little more than hope. Judging by the pounds 84m takeover this week by Grand Metropolitan and Robertson & Baxter of the North British Distillery in Edinburgh, even 275p now looks on the pricey side.

The Grand Met bid values North British on an exit multiple of just over 12. At 275p, the exit multiple on Invergordon would be more like 17. If Whyte & Mackay were to return with such an offer, as I suspect it will shortly, it would have no difficulty in finding sufficient takers to gain control. Even Robert Fleming, which as a merchant bank defended Invergordon last time round but as a fund manager owns just over 14 per cent of the shares, is said to be itching to sell. That's a shame for the future of independent whisky distillers in Scotland, but the City never did go a bundle on sentimentality; for managements that fail to live up to their promises, it's particularly unforgiving.