Gartland back with pounds 73m deal

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The Independent Online
Acquisition specialist Gartland Whalley & Barker is expected to announce in its prospectus this week that its reversal into the cash-rich shell company Select Industries will value GWB at about pounds 73m.

The paper deal will allow GWB, headed by Eighties whizzkid Tony Gartland, to pick up Select's pounds 5m cash pile, while providing an exit for some of the shell's shareholders. GWB will also get a secondary benefit from Select's pounds 86m in capital losses, which it will be able to offset against its own capital gains.

Plans call for pounds 600,000 of new stock to be issued to cover the costs of the transaction. However, the new issue is thought to be twice over- subscribed, and additional shares could be issued to satisfy institutional demand.

After a one-for-20 share consolidation the new stock will be valued at pounds 1, up slightly from 4.5p when Select's shares were suspended but double the 2.5p level they were at a few weeks ago.

Halifax-based GWB is a unique company, crossing a venture capital firm with a traditional industrial conglomerate. It was formed by the executive team that took a small electrical firm, FKI, and built it into a pounds 600m conglomerate during the 1980s. The 1987 stock market crash marked the end of the good times for the acquisition-driven group, and in 1991 Mr Gartland stepped down as chairman. Meanwhile he, with FKI colleagues Jeff Whalley and James Barker, had set up GWB to buy up small companies.

They buy or create small companies, merge similar ones, float them when they are worth pounds 10m to pounds 15m and use the new capital to continue an aggressive growth strategy until they are 10 times that size.