Investment: Rugby's pounds 250m sell-off permits Scancem bids
Wednesday 31 March 1999
The UK group yesterday pleased the City with radical plans to sell all its joinery and materials businesses to focus on cement and lime operations.
Rugby said it was in advanced talks with Jeld-Wen, a private US company, over the sale of its US, UK and Australian joinery companies, which make doors and windowframes, and its US distribution subsidiary. The disposals are likely to net Rugby over pounds 250m. They will involve the loss of pounds 700m of sales, 70 per cent of group turnover.
The chief executive, Peter Johnson, said the sales would help Rugby make inroads into the global cement market. "The cement industry is like a jungle and you cannot go into the jungle with one eye on the joinery business," he said.
Funds raised will enable Rugby to participate in the auction for Scancem, owner of Castle Cement, the second-ranked UK cement maker. The Scandinavian company is being sold by its joint owners, Skanska of Sweden and Aker of Norway. The sale has attracted interest from European building materials groups, including CRH of Ireland, France's Lafarge and British group RMC.
Analysts believe Rugby will not be able to buy the whole group, but could bid for its east European assets. Scancem owns firms in Finland, the Baltic States and Poland, which fit with Rugby's Polish business.
The UK company could also buy parts of Castle Cement, although buying the entire group would be blocked on competition grounds.
News of the sales and potential purchases overshadowed Rugby's 1998 results. The group posted a small increase in operating profit to pounds 76.9m on sales down 4 per cent to pounds 1.02bn.
Analysts said the restructuring raised the chance of a bid for Rugby. "[After the disposals] they are a very tidied-up company. If there is a predator, Rugby is doing all the dirty work for them," said David Taylor of Teather & Greenwood.
After the sale of Castle Cement, Rugby will be the only large UK cement producer available to buy. It could attract European giants such as Lafarge and CRH, believe analysts. Profit forecasts for 1999 and the p/e ratio are now academic, but given the bid prospects Rugby's shares, up 2p to 113p yesterday, are a good speculative buy.
- 1 Which country would be hardest to invade?
- 2 The man who filmed the Freddie Gray video has been arrested at gunpoint
- 3 Floyd Mayweather vs Manny Pacquiao live: Mayweather puts on defensive masterclass to win by unanimous decision
- 4 Floyd Mayweather's mouthguard costs $25,000 - enough to fly to Las Vegas and back 18 times
- 5 Royal baby girl born: Duchess of Cambridge's second child will be a princess thanks to Queen
Which country would be hardest to invade?
Morgan Freeman on the riot-focused coverage of the Baltimore protests: 'F**k the media'
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
The man who filmed the Freddie Gray video has been arrested at gunpoint
Nepal earthquake: Many survivors receiving no help despite relief effort
Over 50,000 families shipped out of London boroughs in the past three years due to welfare cuts and soaring rents
EU asylum policy is 'a direct threat to our civilisation', says Nigel Farage
Indonesia executions live: 'Hysterical' families heard prisoners being shot dead by firing squad
General Election 2015: SNP and its activists 'openly racist' towards the English, Farage says
EU exit would hit UK economy much harder than neighbouring countries, study finds
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
iJobs Money & Business
£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...
£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...
£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...
£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...