Investment: Cellnet holds the key to Securicor's value
Thursday 22 October 1998
Yesterday the bulls had their say as BT Alex.Brown, the broker, slapped a 520p target on the shares, with a longer-term value of 700p. The shares closed up 5p at 415p.
The debate about Securicor hinges on the value of its stake in Cellnet, the mobile phone network. Soaring valuations for quoted mobile operators Orange and Vodafone have dragged up the implied worth of Securicor's 40 per cent shareholding, propelling its shares into the FTSE 100 index.
Despite the recent slump - Orange shares are 34 per cent below their peak - the bulls reckon Cellnet is still worth at least pounds 6bn, valuing Securicor's stake at around pounds 2.4bn.
They add on another pounds 1bn for the group's security and distribution operations, a figure roughly in line with their forecast revenues. Knock out pounds 200m of debt and the whole group is worth about pounds 3.2bn - equivalent to 530p a share. If mobile stocks rebound, the value is higher.
The key question, however, is whether Securicor will ever get full value for its Cellnet stake. The only credible buyer is majority shareholder British Telecom, which already runs the business.
Government opposition to a deal has eased, opening the way for BT to make an offer next year. But there is no reason for the telecoms giant to pay Securicor the market value for its stake. It has already opposed other options, such as a stock market flotation of Securicor's stake.
Even at current levels, Securicor shares assume an unusual amount of generosity from BT. With the deteriorating economic climate likely to affect the security and distribution businesses, this is a punt that shareholders can afford to miss. Avoid.
- 1 Amy Winehouse statue unveiled in Camden
- 2 Lego breaks out of the toy box and heads for the gallery
- 3 George Galloway on Scottish independence: The political class is doing what Hitler couldn’t – destroying Britain
- 4 Headaches, fry ups, and hair of the dog - why do we get hangovers, and is there such thing as a 'cure'?
- 5 A bottle of wine a day is not bad for you and abstaining is worse than drinking, scientist claims
George Galloway on Scottish independence: The political class is doing what Hitler couldn’t – destroying Britain
Daniele Watts: Django Unchained actress detained in Los Angeles after being mistaken for a prostitute
Scottish independence: Nationalist leader Jim Sillars threatens pro-union companies with 'day of reckoning' after independence
Scottish independence: Yes campaign feels the heat as Alex Salmond's NHS claims come under furious attack
Scottish independence: Britain faces 'constitutional crisis' at next election
£23m Birmingham cycle scheme is attacked by Tory councillor for not catering to the elderly
iJobs Money & Business
£280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...
£35000 - £38000 per annum + Benefits: Ashdown Group: Training Coordinator / Pl...
Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)
£400 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...