Hanson faces pounds 95m bill for breaking up

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The Independent Online
The break-up of Hanson into four separately quoted businesses will cost Lord Hanson's conglomerate pounds 95m in professional fees it emerged yesterday. The posting of demerger documents to shareholders confirmed what analysts have expected for some time - the total dividend will fall by about a third after the split.

Christopher Collins, vice-chairman of Hanson, said investment banks stood to receive about pounds 20m of the total. The group had previously said the professional fees involved in the four-way split would be "containable" thanks to the in-house expertise it had built up over 30 years of hostile takeovers.

Hanson's main adviser is NM Rothschild. The spin-off of tobacco arm Imperial is being handled by Schroders and ABN Amro Hoare Govett, while the demerger of Millennium, the chemicals business, is in the hands of Goldman Sachs, Paine Webber and Merrill Lynch. Next year Cazenove, Morgan Stanley and Lazards will share the fees for the splitting of the Energy division from the rump building material operations.

There were no surprises on the proposed dividend payments by Imperial and Millennium and Hanson's shares slipped just 1p to 161p yesterday. Imperial said it would have paid the equivalent of 2p per Hanson share had it been independent in the current financial year. Millennium, which will be quoted only in New York, said its dividend would be about 0.55p per Hanson share.

The numbers confirmed analysts' beliefs that the 12p payout received last year by Hanson shareholders would be reduced to between 6p and 8p after the split. The prospect of falling income has been one of the main reasons for the sharp underperformance of Hanson shares since the demerger was first mooted in January. Since the announcement of the proposed split, Hanson's shares have fallen from a high of 211.5p, underperforming the market by almost a third.

Analysts' first reading of the hefty documents was encouraging, with most thinking both Imperial and Millennium were likely to prove solid investments.

Shareholders will be asked to approve the first two demergers at an extraordinary meeting on 25 September, with first dealings in Imperial in London on 1 October and New York trading of Millennium starting the following day.

Imperial said it would focus on overseas expansion and hoped to generate a quarter of its sales from foreign markets compared with about half as much currently. In the nine months to September the tobacco company made profits of pounds 270m from sales of pounds 2.8bn. Hanson shareholders will receive one new Imperial share for every 10 Hanson held.

Millennium, in which Hanson shareholders will receive one new share for every 70 held, said it planned to pay a low dividend in the short term to enable it to focus on long-term investment and pay down debts of about $2bn (pounds 1.28bn). In 1995 it made profits of $842m.

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