Hanson considers demerger to boost flagging share price

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The Independent Online
HANSON is considering a radical restructuring in an attempt to boost its flagging share price.

Executives at Lord Hanson's Anglo-American conglomerate, which publishes third-quarter results this week, have become increasingly concerned at the company's low stock market rating relative to other similar concerns, especially in the US.

Options include:

Changing the group's domicile from Britain to America

Demerging non-core businesses

Splitting into two separate companies, one in Britain and one in the US.

Part of the pressure for change has come from senior executives in America, dismayed at the poor return on their employee shares. Hanson enjoys a p/e of around 10p, compared with an average for equivalent US companies of 16p. The shares, which were as high as 245p earlier this year, have slumped below 200p.

Third-quarter results from the conglomerate this week are unlikely to provide much cheer. Bob Carpenter of Kleinwort Benson is predicting a fall in profits to pounds 300m from pounds 380m for the same period last year.

Hanson executives believe the real value of the company is closer to 300p a share. 'A few suggestions have been floated. We are looking at a few ideas,' a Hanson insider said.

'There is a feeling that if we were to do something like demerge, the sum of the parts would be greater than the whole,' said another.

Hanson also fears the group's break-up value will not be lost on a potential predator. Such a move, which executives admit is possible, would prove the ultimate irony for Lord Hanson, who is widely regarded as the ultimate takeover king.

Derek Bonham, the new chief executive, and David Clarke, head of US operations, are understood to have studied a series of scenarios. The idea of moving to the US would go some way towards changing Wall Street's view of Hanson as a British business which happens to have US interests, rather than a big US company.

Another idea is the demerger of non-core businesses, which could focus attention on the group's underlying value. These include recreational products, houseware and Jacuzzi, the shower systems and whirlpool baths manufacturer.

A clean split between Britain and America has not been ruled out. For some time, Hanson has operated as two units, with different sets of management on each side of the Atlantic.

(Photograph omitted)