Electra aims to thwart 3i with share buyback move
Friday 12 March 1999
Electra, which received the bid of 705p a share in January, is proposing a tender offer at 786p for 40 per cent of its share capital, costing the trust pounds 544m. The geared-up trust will then be wound up within five years.
Michael Stoddart, the Electra chairman who founded the trust 26 years ago, said further buybacks were planned: "We would hope the majority, if not all, the money would be back in shareholders' hands within the five years," he said.
Electra will also spend pounds 30m buying out Robert Fleming, the investment bank, from its 50 per cent stake in Electra Fleming, the trust's investment managers. The future of Robert Fleming's stake - sold less than five years ago - was one of the main sticking points of the 3i bid.
The defence was welcomed by the market, which marked the shares up 6 per cent to 729.5p, in spite of the absence of much-rumoured third-party bidders.
But Electra also came under attack from a number of analysts who said it had stretched the value of its unquoted assets to the limit. The trust's biggest unquoted stock, PHS, was valued at pounds 48m at the end of September. According to Electra's valuation, the stock was worth pounds 80m by the end of February. Another holding, in a company called ICIL, more than trebled in value.
Mr Stoddart said the re-valuation of the trust's assets was conservative given the 20 per cent rise in the FT-All Share index. But analysts said the valuation meant the stocks would have to grow earnings by 30 per cent a year.
Analysts also said shareholders wanting to sell their entire holding would get less than the 3i bid - because the rump investment trust, geared up to finance the buyback, would be worth less. They also questioned an incentive scheme, giving senior executives of Electra Fleming up to pounds 30m if they succeed in realising over pounds 1.9bn of assets.
Roly Crawford, head of investment trusts at ABN Amro, said the managers would need to improve the value of assets by only 6 per cent a year to get the rewards: "The whole issue is a bit smelly. Given that they are getting quite a good fee anyway, you would have thought they would have a tougher task."
International Women's Day 2014: The shocking statistics that show why it is still so important
Feminist quotes to inspire you on the International Women's Day
Oscar Pistorius trial: Case turns into a bizarre safari following the tracks of a wounded lion
Belle Knox: How the porn star student from Duke University became bigger than Justin Bieber
Liam Neeson on death of wife Natasha Richardson: ‘When I hear the door opening, I still think I’m going to hear her’
Apple's Tim Cook: Business isn’t just about making profit
Thousands of young people forced to go without food after benefits wrongly stopped under 'draconian' new sanctions regime
Ukraine crisis: New navy chief 'defects' and surrenders Crimean HQ as Putin claims ultranationalists forced intervention
Britain's top vet sparks controversy with call for ban on slashing animals' throats in 'ritual' slaughters for halal and kosher meat products
Ukraine crisis: Russia dismisses '3am ultimatum' as 'total nonsense'
If you're horrified by a flame-roasted dog, you should be shocked at a hog roast
- 1 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 2 Academy members voted for Oscar-winning 12 Years A Slave 'without watching it'
- 3 Orgasm machine to deliver climax at the push of a button
- 4 Liam Neeson turned down James Bond role to marry Natasha Richardson
- 5 Livr: A social network only for drunk people
iJobs Money & Business
£12000 per annum: Inspiring Interns: The company works with Tier 1 FTSE 100 Ba...
£32000 - £36000 per annum + generous benefits: Pro-Recruitment Group: * TAX * ...
£37000 - £40000 per annum + £20000 benefits package: Pro-Recruitment Group: **...
£30000 - £35000 per annum + generous benefits: Pro-Recruitment Group: Mixed Ta...