Grand Met looks too large to digest
Sunday 26 November 1995
That means names such as Guinness, Seagram and KKR, the US leveraged buyout artists, are unlikely to come forward. Even then, Grand Met should get better value if it dismembered the business itself. This leaves potential investors wondering what there is to go for in the shares, at 430p, given their failure to hang on to any of their recent gains on the bid speculation.
Despite this, they remain on a handsome yield of 4.2 per cent. If Grand Met has been expert at living off leverage itself, its debt is at manageable proportions and should improve as the company is set to sell parts of the business. Some 750 managed and 1,350 franchised Burger King stores, and the Pearl Eye stores worth up to pounds 100m are on the block. Final pre- tax profits next Thursday, Lord Sheppard's last, will slip to around pounds 910m from pounds 945m after loss of rights to Absolut Vodka. But with food and market share in the US improving, the shares remain a long-term buy.
FUNNY goings on in TSB shares. After the merger with Lloyds Bank was announced in September, the shares rocketed 45 per cent to their current level of 404p. Given that TSB holders are to receive one Lloyds-TSB share, plus a special dividend of 68.3p for each TSB share - worth around 372p - broker Charles Stanley asks the pertinent question: why are TSB shares trading above this level?
There has been speculation of a counter-offer, from either HSBC or an Australian bank. But, as Charles Stanley points out, the imminent completion of the Lloyds deal makes this an increasingly unlikely prospect.
Sell in the market, and reinvest some of the funds back into Lloyds. That way you will still pick up the benefits from the merger, outweighing the risks of missing out on a higher offer.
IN THE past, this column has been scathing of Sterling Publishing, and rightly so. But the troubled business has at last managed to sell its Turret Group for pounds 7.9m in cash. And in October, it disposed of its US business, Sterling Northeast, for pounds 2.7m. Sales in the remaining reference book division should now have some stability.
While the shares retain a deal of risk - no sign yet of any management changes to beef up the board - the preference shares could offer an interesting punt. At 51p, they yield almost 15 per cent. With operating profits likely to beat pounds 2m, there should be ample money to cover debts of pounds 4m, and the prefs' pounds 600,000 payout. A risky, but potentially profitable investment.
BUNZL has suffered from overreaction. When a company in a viciously cyclical industry takes a hit, you can count on other shares in the sector tumbling in sympathy. The knack is spotting those which have been marked down unfairly and buying for their recovery potential.
Arjo Wiggins' profits warning the week before last was a case in point. Shares in fellow paper and packaging groups collapsed, as brokers marked prices down across the board. Bunzl was no exception. From 196p, they are now 176p.
True, the paper sector is approaching a critical turning point in its cycle. There is evidence of destocking across Europe, while the remarkable price rises of the last two years in the main paper products have almost certainly peaked. But Bunzl is in totally different areas to Arjo, with the exception of fine papers, the one area in which Arjo was doing well. Buy.
PACKAGING group Wace expects its recommended pounds 26.2m cash offer or 195p a share for specialist printer Ferry Pickering should be earnings enhancing in its first full year. Although Wace shares were off on the news, to the week at 232p, down 13p in two days, the company can fund the deal out of cash. Expect more acquisitions to come. Meanwhile, the shares are a buy.
DIRECTORS of Euromoney Publications (943p) made hefty profits from share sales earlier this year. But in September, the group said profits would fall a quarter from last year's pounds 24m, and the price fell like a stone, curbing the opportunity of similar gains for a while to come.
Full-year results on Tuesday will be watched closely. Long-term shareholders are still showing substantial gains. The all-important September edition of its flagship magazine Euromoney, makes a quarter of advertising revenue on the back of the IMF meeting. Sales were exceptionally weak this year. Avoid.
- 1 Migrant crisis: Greek soldier saved 20 people singlehandedly off Rhodes beach
- 2 The confessions of men who ordered mail-order brides
- 3 UK weather: Britain braced for snow as arctic air mass moves in
- 4 Aaron and Melissa Klein: Oregon anti-gay bakers ordered to pay $135,000 after refusing to make cake for same-sex wedding
- 5 'Isis' schoolgirls: Missing British teenager tweets picture of her Syrian takeaway
Migrant crisis: Greek soldier saved 20 people singlehandedly off Rhodes beach
Aaron and Melissa Klein: Oregon anti-gay bakers ordered to pay $135,000 after refusing to make cake for same-sex wedding
UK weather: Britain braced for snow as arctic air mass moves in
Power of Nepal earthquake was equivalent to 20 huge atomic bombs
Nepal earthquake video: Terrifying footage shows moment avalanche hit Everest Base Camp
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband
The sickening truth about food banks that the Tories don't want you to know
Migrant boat disaster: Ukip candidate mocks victims in sickening Twitter post
Nigel Farage wants the BBC to stop making programmes like Doctor Who, Strictly Come Dancing, and Top Gear
Global warming: Scientists say temperatures could rise by 6C by 2100 and call for action ahead of UN meeting in Paris
General Election 2015: Britain would become a 'communist dictatorship' under Ed Miliband and Nicola Sturgeon, claims wife of Michael Gove
iJobs Money & Business
£20000 - £60000 per annum: Recruitment Genius: Are you recently QCA Level 4 qu...
£20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...
£25 - 30k: Guru Careers: We are seeking an Application Support Analyst / 1st L...
£45K - £55K (DOE) + Benefits: Guru Careers: We are seeking a full stack .NET D...