Market Report: Thorn EMI in spotlight after talk of break-up

Click to follow
The Independent Online
IS THORN EMI contemplating splitting into two - music and rental? The possibility of a break-up next year was raised by UBS, the securities house, which believes the two halves would have a combined value of almost pounds 15 a share against yesterday's 1,144p, up 19p.

Analysts Paul Heath and Julian Easthope say a demerger would be a 'logical next move to unlock shareholder value'.

They would expect the music side to command a glamour rating with profits at the rental operations capable of a dramatic improvement.

The two sides should have lifted Thorn's profits to pounds 329.7m last year, then to pounds 435m this year and pounds 530m next.

UBS thinks Thorn will sell its remaining defence and lighting businesses before the break-up.

The Swiss-owned securities house suggests that Thorn is the best-placed leisure operation to 'benefit from rising media values as the largest independent music group'. And it sees the British rental side following the Granada example and selling TV sets no longer in the rental catalogue for, perhaps, pounds 100 each.

Such a move could add pounds 75m to rental profits over four years and return Thorn's rental performance nearer to Granada's level.

The quoted rental side would embrace Rent-a-Center, the US business. Its rent-to-own concept is being promoted in Britain through a new stores chain, called Crazy George. The Rent-a-Center idea is also likely to find favour in Eastern Europe.

Thorn did not have to rely entirely on UBS support. The shares were helped by talk of a Whitehall clearance of the record industry's CD pricing policy which was heavily criticised by MPs.

The rest of the stock market was again under the New York whip. Shares started brightly and at one time the FT-SE 100 index was up 31.3 points with hopes of lower European interest rates causing much of the excitement.

But a subdued New York performance had some of the more optimistic souls running for cover, and by the close the index could offer no more than a 9.7 gain at 3,159.1. Trading was strong, however, with a number of chunky deals helping to lift volume to 906.2 million shares.

Contrasting retailers Laura Ashley and Brown & Jackson attracted much of the attention. The sudden departure of chief executive Jim Maxmin sent Laura Ashley shares tumbling to 77.5p, closing at 81p, off 4p.

B&J, the Poundstretcher group, continued to benefit from the arrival of the Weisfeld family of What Everyone Wants fame.

In brisk trading - Seaq put turnover at 38 million - the shares touched 6p, closing at 5.75p. They have almost doubled since the Weisfeld rescue operation became known.

Lasmo, the hard-pressed oil group stuck at 129p. Rights issue rumours are strengthening - some were prepared to bank on a pounds 200m-plus cash call being announced today.

There have been suggestions that the appointment of Rudolf Agnew, ex-Consolidated Gold Fields, as chairman, was to help smooth the way for Lasmo's long-suspected, but possibly hard to accept, rights.

Its traumatic experience over Ultramar, hefty losses and the bleak oil price outlook have led many observers to believe that a rights issue, which would be deeply discounted, cannot be long delayed.

Dalgety, meeting analysts, gained 6p to 455p. Unilever, helped by a Societe Generale Strauss Turnbull recommendation, gained 18p to 1,046p.

Rank Organisation rose 11.5p to 420p as Henderson Crosthwaite again made bullish noises.

Amstrad, down 2p to 35p, was apparently ruffled by the mounting problems at Tottenham Hotspur.

Oceana Consolidated, owners of stockbroker Charles Stanley, rose 30p to 176p. Director buying prompted the advance.

Tesco's cut profits were submerged by the confident statement, leaving the shares 3p higher at 218p.

Other supermarket shares responded, with J Sainsbury gaining 9p to 375p. But worries that it may have lost market share clipped Kwik Save 12p to 601p.

Glaxo Holdings suffered a 17p hit to 581p as its Zantac patent came under renewed pressure in North Carolina.

David Lloyd Leisure gained 17p to 234p following the acquisition of a site near Sutton Coldfield. There is talk of next year's profit forecasts being increased. They are currently around pounds 8.7m.

Mid-States, a US car parts distributor, rose 4p to 107p as it reported profits of pounds 3.5m and a US share presence involving a cash call to raise up to pounds 17m.

Trafficmaster ran into profit-taking following its recent advance, falling 16p to 204p. The shares were sold at 130p.

The revamping exercise, which includes a pounds 1.2m cash call, at Unit, the pallet maker, sent the shares up 10p to 40p.

The FT-SE 100 index rose 9.7 points to 3,159.1 and the supporting FT-SE 250 index scored a 28.8 gain to 3,808.3. Turnover rose to 906.2 million shares with 29,750 bargains. The account ends on 22 April with settlement on 3 May. Government stocks drifted lower.

Struggling Quiligotti, the terrazzo tile group, firmed to 2p as it paid pounds 1.6m for one of its main rivals. The latest move in the programme to revive the company follows the arrival of a private investment group with a 33 per cent stake and a pounds 2.8m cash-raising exercise. The company came to market in 1989 when it made profits of pounds 2.3m. Since then it has slumped into the red.

Ugland International, once Bristol Channel Ship Repairers, has caught the eye of the Jupiter Tyndall investment group, which has a 14.02 per cent shareholding. Run by Andreas Ugland, a member of a Norwegian shipping family, the company is a shipping and dry dock operation. It recently acquired a Norwegian shipping group. The shares held at 122p.

(Graph omitted)

Comments