Outlook: Rolls-Royce pays a Challenging price for Vickers
Tuesday 21 September 1999
Those with memories stretching back a decade will recall the ill-fated acquisition of Northern Engineering Industries and shiver. Then, as now, Rolls got distracted from its main job of making aero-engines and decided to buy a different type of business, in that case one that made turbines for power stations. Then, as now, there was a lot of brave talk about global leadership and synergies as well as all the lovely things that would happen to earnings.
The reckoning, when it came, was savage both for shareholders in Rolls, who saw pounds 263m wiped off profits, and for jobs in the North East, where they are still adjusting to the demise of one of the regions best known employers. Rolls says solemnly that things will be different this time around. The pounds 576m that it is paying for Vickers (pounds 780m if you throw in its debt) is cheap by the standards of other deals in the engineering sector.
What is more, Rolls is not entering unchartered waters with this deal since its main interest lies not in Challenger tanks but Vickers' marine propulsion division, an area where Rolls already has expertise of its own in the shape of its naval gas turbine business. Just connect its marine Trent engine to Vickers' latest Kamewa water jets and watch that bottom line grow.
Unfortunately, yesterday's marriage was consummated so fast that most of the detail is still waiting to be filled in - like forecasts for the revenues and savings that will flow from the deal. In case the words marry, haste, repent and leisure should come to mind, Rolls is anxious to stress that it has been tracking Vickers on its radar for more than a year.
Even so, Rolls will struggle to convince the City that this deal does as much for its own shareholders as those of Vickers. The baron from Brussels, Paul Buysse, who has been running Vickers for 18 months and will now presumably collect his cheque and move on, could only have dreamed of propelling the Vickers share price to the 250p that Rolls is paying.
- 1 Mystery of the Siberian holes at the end of the world 'solved': Scientists offer explanation
- 2 Pope Francis issues top 10 tips for happiness
- 3 Disney heiress Abigail disowns her share of family profits in West Bank company
- 4 Israel's propaganda machine is finally starting to misfire
- 5 Sean Hannity reacts to Russell Brand's Israel-Gaza criticism: 'You're a dumb actor known for your failed marriage to Katy Perry'
Lost portraits of the Somme: 100 images of Tommies posing before they went over the top. Now can you help to identify them?
Mystery of the Siberian holes at the end of the world 'solved': Scientists offer explanation
Pope Francis issues top 10 tips for happiness
Sabina Altynbekova, the girl branded 'too good looking' for volleyball, says social media obsession with her is a 'bit much'
Ashley Cole tweets unsettling meme of him stalking ex-wife Cheryl Cole and new husband Jean-Bernard Fernandez-Versini
Land for gas: Merkel and Putin discussed secret deal could end Ukraine crisis
Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
Richard Dawkins tweets: 'Date rape is bad, stranger rape is worse'
Putin is 'thuggish, dishonest and reckless', says British ambassador to US
Boozy, ignorant, intolerant, but very polite – Britain as others see us
A new Russian revolution: The cracks are starting to appear in Putin’s Kremlin power bloc
- < Previous
- Next >
iJobs Money & Business
£300 - £350 per day: Orgtel: Financial Analyst, Forecasting, Halifax, Banking,...
£500 per day: Orgtel: Business Architect - Banking - Bristol - £500 per day A...
£200 - £500 per day + competitive: Orgtel: I am currently working on a large p...
£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...