Outlook: Soldering on

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The Independent Online
AND FINALLY, a festive story from the world of solder and soldering to warm the heart and demonstrate that fortunes are not just being made in cyberspace at the moment. Kelsey Industries, which is in the deeply unglamorous business of supplying solder wire, flux and paste to the electronics industry, was yesterday sold for a 275 per cent premium, a record for the London market this year.

Like many other smaller cap stocks, Kelsey was stuck with a bombed-out share price, unloved and overlooked by the large pension funds and marooned in a terminally unfashionable corner of the market.

The Arbib family, Kelsey's majority shareholders, could have adopted the familiar strategy of taking the business private for a modest premium. Instead, they hired Close Brothers who, with a mixture of luck and hard work, found a sugar daddy in the shape of Henkel, the German company behind the Loctite name. Henkel can see a store of value in Kelsey where the market cannot and has agreed to pay 1400p a share compared with a price of 373p the day before Kelsey disclosed it was in bid talks.

Of course, it is not unusual for private buyers to pay a higher price than could otherwise be achieved because of the economies of scale and access to new customers that trade deals often bring. Richard Branson demonstrated as much with the sale of a stake in Virgin Atlantic to Singapore Airlines this week.

But Kelsey's good fortune also demonstrates that companies do not always have to end in dot.com to bring a smile to investors' faces.