Mower firm returns to market

IN WHAT WILL amount to a seven-year round trip out of the stock market and back, AQ Holdings, the Qualcast lawn- mower manufacturer, is heading for a return to life as a quoted company.

The Suffolk company, bought by its management for pounds 17m from the cement-maker Blue Circle 18 months ago, is planning a stock market flotation some time next year.

The move, either through a new share quote or the reverse takeover of a shell company, is expected to value the company at about pounds 40m and will turn its senior managers, led by managing director Stephen Roberts, into paper millionaires.

The group, which also owns the Atco and Suffolk brands, was formerly part of Birmid Qualcast, the building supplies group taken over by Blue Circle in 1988. Four years later, AQ was sold to its management with backing from Candover Investments, the venture capital firm, and the Bank of Scotland.

Since then, AQ has carried out a huge restructuring of its production and management. The traditional assembly line manufacturing process has given way to team-based production to reduce costs and boost quality, while a whole layer of middle management has been removed, cutting staff numbers by about 30 to 495. 'We have been moving away from being a division of a large company to being an independently run business,' says Mr Roberts.

The company is holding an extensive beauty contest of stockbrokers and merchant banks to appoint financial advisers by this Christmas.

The company boasts a 30 per cent stake in the UK lawn-mower market - about the same as its two nearest mass market rivals: Flymo, owned by Electrolux, the Swedish group, and Black & Decker. AQ has a 40-strong product range priced from about pounds 50 to pounds 2,500.

Operating profits surged by almost 70 per cent to pounds 2.2m last year on virtually unchanged sales of pounds 40m. This year it expects to boost profits by a quarter, thanks partly to a successful diversification into hedgerow cutters.

The flotation is aimed at raising funds to cut its pounds 8m debts and finance expansion, possibly through acquisitions.