Davis appointment wrecks Colman deal
Sunday 23 April 1995
The businesses now look like going to Bass, the brewing and hotels group, for around £300m.
Mr Davis was heading a management buy-in team, backed by Schroder Ventures and Electra, the venture capitalists, which was close to agreeing the deal when he decided to take up the Prudential appointment. "We got to the point where we were just hours away from doing the deal in principle when Peter Davis said he wished to pursue the Prudential offer," said one source.
Following his decision, the Schroder Venture financiers were encouraged to meet Richard Holroyd, who is the managing director of Colman in Norwich.
This was with a view to backing the existing management in a management buyout rather than bringing in Mr Davis as part of a buy-in.
A team flew to Switzerland, where Mr Holroyd was holidaying, and came back with a different view of the businesses' profitability than that given to it previously by Reckitt & Colman's advisers, Goldman Sachs.
Mr Holroyd said the 1994 results had been unusually good because of an exceptionally warm summer, which had inflated demand for Robinson's drinks.
Mr Holroyd also said that the Goldman Sachs forecasts for the soft drinks businesses were based on the group's manufacturing capacity being run to capacity, which he said was unrealistic.
As a result of these meetings the Schroder Ventures team reduced its price by around 20 per cent, and at this stage the Goldman Sachs director Federico Aliboni said he would talk to other interested bidders. If Reckitt & Colman does decide to sell the businesses to a trade buyer such as Bass, this will represent a distinct change in strategy.
Reckitt & Colman had earlier preferred a sale to a financial buyer, partly because it believed that this course of action would result in fewer redundancies.
A spokesman for Reckitt & Colman declined to comment this weekend on the discussions with interested bidders, which are continuing.
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