Outlook: What will GEC do with all the money?
Friday 05 December 1997
A year and a bit into the task, progress remains patchy. Mr Simpson inherited a business with a hopelessly inefficient balance sheet and a risk-averse culture. He has gone some way to addressing the latter handicap, notably with the streamlining of the management and the appointment as finance director of John Mayo from Zeneca, who can be relied upon to ginger things up.
But the net effect of yesterday's announcements, not withstanding the pounds 300m share buy-back, will be to leave the balance sheet groaning under more not less cash sitting on deposit at Barclays. The flotation of GEC Alsthom should bring in pounds 1bn while another pounds 300m is likely to be raised from the disposal of the rump of GEC's UK industrial businesses. Together with the pounds 1.2bn already on hand, Mr Simpson will have a war chest of some pounds 2.5bn ready to spend on acquisitions. If GEC goes the whole hog and loads up with debt, then its spending power would be even greater.
The problem with having that sort of money burning a hole in your back pocket is that the market tends to see you coming. Mr Simpson knows this. He declined to pay the asking price for Siemens Defence and as a result lost out to his erstwhile colleague, Sir Dick Evans of British Aerospace.
Mr Simpson was not sharing his thoughts yesterday as to where else the money might be invested. But France looks to be off the menu for a while given the Jospin government's determination to keep its defence restructuring an exclusively Gallic affair. Openings also look limited in the US, where GEC would love to do some deals but keeps running into the brick wall known as the Pentagon black programmes.
That leaves the option of handing more cash back to shareholders. GEC pleaded tax problems for the modest distribution announced yesterday. But in his previous life, Mr Mayo was a high-flying corporate financier with Warburgs. After Reuters example yesterday, he will not be short of an idea or two.
Diving in at the deep end is no excuse for shirking the style stakes
- 1 Game of Thrones author George RR Martin says 'f*** you' to fans who fear he will die before finishing Westeros saga
- 2 PornHub begs users to stop uploading video clips of Brazil getting beaten 7-1
- 3 Why I'm on the brink of burning my Israeli passport
- 4 L'Oreal cuts ties with Belgium supporter Axelle Despiegelaere after hunting trip photographs
- 5 The true Gaza back-story that the Israelis aren’t telling this week
Game of Thrones author George RR Martin says 'f*** you' to fans who fear he will die before finishing Westeros saga
Loom bands: Bids for dress made from colourful rubber pass £170,000 on eBay
Supermoon 2014: When and why will the moon look bigger and brighter this summer?
Gaza-Israel conflict: The terrible price Palestinian children are paying for Israel’s war with Hamas
Rotten egg smell could help battle heart disease and Alzheimer's
Sustained immigration has not harmed Britons' employment, say government advisers
War is war: Why I stand with Israel
7/7 memorial defaced on anniversary of 2005 attacks with ‘Blair lied thousands died’ graffiti
Australia facing international condemnation after turning around Sri Lankans at sea
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
Socialist Worker called to apologise over ‘vile’ article saying Eton schoolboy Horatio Chapple's death is ‘reason to save the polar bears’
iJobs Money & Business
£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...
£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...
£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...
£40000 per annum: Harrington Starr: Network Engineer (CCNA, CCNP, Linux, OSPF,...