GUS pressed to spin off credit rating arm

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The Independent Online
LORD Wolfson of Sunningdale, the chairman of GUS, is to come under increased pressure to spin off the mail-order group's credit-rating business, Experian, in the next few months, writes Jason Nisse.

The former chief of staff for Baroness Thatcher shocked the City by issuing GUS's third profits warning in a year on Thursday, causing a collapse in the share price, which hit a low of 340.5p compared with 850p a few months ago.

At the same time, he said he had rolled back previously announced plans to demerge Experian which, he said, could not be floated until 2001. This is because the group, formed after the purchase of a US business in 1998, had not had three years' trading in its present form.

However, managers at Experian are understood to be unhappy at the delay, believing that this leaves GUS open to a potential hostile bid.

They point out that on current market valuation, Experian is worth more than the entire pounds 3.5bn market capitalisation of GUS. Analysts estimate Experian will make around pounds 220m this year, more than half GUS's pre-tax profits. Similar businesses in the US are valued at between 25 and 35 times taxed earnings, implying a value for Experian at between pounds 4bn and pounds 5bn.

However, a senior source pointed out that Experian might be more highly rated. "The US groups are trying to break into Europe because it's the growth market, and we are already set up here," he said. "If we do not unlock the value of this business, someone else will."

Even the appointment of John Pearce, Experian's chief executive, as chief executive of the whole group has not placated insiders. "John is a good bloke, but he still has to answer to Wolfson," said an insider.