Hanson set to spin off businesses by October

Hanson's rule as Britain's leading conglomerate will officially end in less than eight months, a year after it stunned British business by announcing it was breaking itself up. The group yesterday put dates on the proposed demergers of its chemicals, tobacco and energy arms and said the process was "firmly on track".

Announcing better than expected first-half figures, the company also spelt out plans to allocate the pounds 3.5bn debt mountain that will remain even after recent disposals which have raised more than pounds 2bn. The core business, which will still be headed by Lord Hanson, will take on negligible borrowings, sparking speculation yesterday that a new round of takeovers may follow the demergers.

Analysts broadly welcomed the new detail yesterday, with some increasing their estimates of the conglomerate's break-up value from around to 210p to 215p. Derek Bonham, chief executive, took the opportunity to unveil names for two of the four businesses to be created. The chemicals arm, which trades mainly in the US and will be quoted only in New York, will be known as Millennium Chemicals. The tobacco business reverts to its former name of Imperial Tobacco.

Both will be spun off on 1 October, with the as yet unnamed Energy division following at the end of January 1997. The rump building materials business will retain the Hanson name.

The chemicals arm, which takes in the Quantum and SCM chemicals businesses as well as Hanson's remaining stake in Suburban Propane and flavouring company Glidco, has been assigned between pounds 1.3bn and pounds 1.4bn of the debt pile, but still believes it will attract an investment grade rating from Standard & Poor's and Moody's.

Imperial Tobacco and Energy will both adopt just over pounds 1bn of group borrowings each, while the rump will take less than pounds 200m. Andrew Dougal, finance director, said that reflected both "new" Hanson's intrinsic cyclicality and the need to reassure bond holders whose long-term debt would remain with Hanson.

The demerger details emerged as Hanson revealed first-half profits of pounds 794m compared with pounds 623m last time, although that figure included a pounds 160m one-off disposal profit from recent sales such as that of Cavenham Forest Industries. Flat underlying profits reflected a better than expected performance from Eastern Group, the former regional electricity company acquired last year, which offset a sharper than forecast fall in profits from Quantum, where lower prices reversed last year's exceptionally high return and profits tumbled 60 per cent to pounds 84m after an 18 per cent sales decline.

Imperial Tobacco, whose brands include Lambert and Butler cigarettes and King Edward cigars, increased profits by 9 per cent to pounds 174m, increasing its UK market share to over 38 per cent. The company, which is the second largest UK manufacturer of tobacco products, said it was targeting the high growth markets of the Far East, which account for more than half the world cigarette market.

In the core building operations, ARC was hit by lower government spending on roads in the UK but sales of Grove cranes continued to move ahead and profits rose from pounds 15m to pounds 23m. Hanson Brick, the UK's largest clay brick maker, experienced weaker demand.

Hanson said yesterday it was in negotiations with the Inland Revenue and US tax authorities over the distribution of shares in the three new companies to existing Hanson shareholders. Andrew Dougal said he was confident that the handout would be tax-free to both UK and US shareholders.

Shareholders who do not wish to hold on to shares in any of the demerging businesses will be offered a low-cost dealing facility, similar to that offered at the time of last year's demerger of a clutch of smaller US businesses under the umbrella of US Industries.

No firm details of the demerger costs were available, but Mr Bonham sought to assure shareholders that much of the preparatory work was done in-house. He said the total cost would be considerably lower than in several recent City deals.

Hanson's shares closed 5p lower yesterday at 192p.

Start your day with The Independent, sign up for daily news emails
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Business Development Executive - Affiliates & Partnerships

£20000 - £35000 per annum: Recruitment Genius: This multi-award winning foreig...

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Day In a Page

No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor