Hanson wipes out $1.3bn debt
In a move that threw the management succession at the Anglo-American conglomerate into confusion, Hanson announced plans to demerge 34 of its non-core US businesses into a highly geared, New York quoted company.
US Industries, which will include brand names such as the Jacuzzi whirlpool business, will take $1.35bn of debt off the Hanson balance sheet, reducing gearing from 58 per cent to 38 per cent and setting the company up for a large, probably UK based acquisition.
Despite the rumours, shares in the favourites to be taken over were broadly unchanged yesterday. Likely bid targets, which might satisfy Hanson's search for stable, growing earnings include United Biscuits, Argyll and Yorkshire Electric.
The demerged company will be run by David Clarke, the current chief executive of Hanson Industries, the group's US arm. He said yesterday that he had asked Lords Hanson and White to run his own show again, but his appointment is viewed as at best a sideways move.
As well as Jacuzzi, the 34 businesses, which Derek Bonham, chief executive, said were previously candidates for disposal or flotation, include the golf equipment maker, Tommy Armour, Rexair vacuum cleaners, Ertl toys and Ames, the garden tools maker.
Mr Clarke has agreed to take a pay cut following the split although the shortfall is expected to be made up in the form of share options. He will be replaced by Bill Landuyt, currently the group's finance director, a well-regarded 39-year-old American. He in turn is replaced by his deputy Andrew Dougal.
When the demerger takes effect in June, shareholders will be handed one share in USI for every 100 Hanson shares. USI will take on $1.4bn of debts underwritten by Bank of America, of which Hanson will receive $1.35bn after costs.
Shareholders will be offered a low-cost dealing facility if they end up with uneconomic holdings of fewer than 100 USI shares, the position for holders of about 15 per cent of Hanson's equity.The Inland Revenue has confirmed that the distribution, in effect an additional dividend, will be tax-free although selling the shares could still incur capital gains tax.
Although small in Hanson terms, USI will still be one of the US's 200 largest companies with sales of £1.9bn and operating profits of almost £200m.
Because of the size of its debts, which at the outset will outstrip net assets by four to one, no dividend is likely to be paid. Mr Clarke said that borrowings would reduce quickly through disposals, operating cash- flow and the absence of a pay-out to shareholders. Although Hanson's earnings per share will be diluted by the deal on a pro forma basis, the company has promised to maintain the cash level of its own dividend.
The tidying up of Hanson's balance sheet came as no surprise to analysts, who have expected a sizeable acquisition for some time. Although a gearing ceiling of 100 per cent would in theory have allowed a bid of up to £2.2bn, that would have only been possible without a goodwill write-off at the time of purchase. Hanson's shares closed yesterday up 6.75p at 242.25p.
- 1 Keira Knightley topless: Usually conservative actress does own take on #Freethenipple campaign for Interview Magazine
- 2 Oil tanker with $100 million cargo goes missing off Texas coast
- 3 George Galloway left with severe bruising after attack in Notting Hill by man 'shouting about the Holocaust'
- 4 Lady al-Qa’ida: On the trail of Dr Aafia Siddiqui, the world’s most wanted prisoner
- 5 A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
YouTube video posted by Isis militants shows 'execution of 250 Syrian soldiers'
Keira Knightley topless: Usually conservative actress does own take on #Freethenipple campaign for Interview Magazine
Oil tanker with $100 million cargo goes missing off Texas coast
George Galloway left with severe bruising after attack in Notting Hill by man 'shouting about the Holocaust'
A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
Robin Williams Emmys tribute led by Billy Crystal criticised for including 'racist' joke about Muslim woman
The Rotherham child abuse scandal is a tale of apologists, misogyny and double standards
What do immigrants really think of Britain? Polish immigrant's Reddit post goes viral
Scottish independence TV debate: Pumped-up Alex Salmond bounces back in bruising second round against Alistair Darling
Do you realise just how foolish the UK looks?
With Douglas Carswell joining Ukip, my party has taken another giant step forward
- < Previous
- Next >
iJobs Money & Business
Highly Attractive Salary: Austen Lloyd: BRISTOL - This is a very unusual law c...
£35000 per annum: Harrington Starr: Network Engineer (CCNP, CCNA, Linux, OSPF,...
£50000 per annum: Harrington Starr: DevOps Engineer (Systems Administration, L...
£60000 - £70000 per annum: Harrington Starr: A prestigious leading professiona...