Photo-Me shares surge as Salomon develops options

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The Independent Online
SHARES in Photo-Me International surged yesterday after the photo-booth operator said that several companies had expressed interest in its businesses.

Photo-Me, which also makes photographic mini-labs, said that it had appointed Salomon Smith Barney to advise it on long-term plans.

Serge Crasnianski, Photo-Me chief executive, said: "In recent months we have received approaches from a number of corporations interested both in our advanced digital and Internet technologies and in our network of some 25,000 prime [photo-booth] locations ..."

Salomon would "formalise the process of exploring all our strategic options in order to maximise shareholder value", Mr Crasnianski said.

The company's shares jumped 215p on the news to close at 1,402.5p. The gain took the company's advance since the start of the year to 287 per cent.

Neither the identities of the potential buyers nor the timetable for the review were disclosed.

In May, Photo-Me signed a deal with British Telecommunications to develop Internet services across its UK booth network.

The first 1,000 online booths, which sparked intense interest in the stock market, are set to be added to its existing booths over the first nine months of next year. Further roll-outs of the Web-access terminals would depend upon demand, Photo-Me said.

The Surrey-based company dominates the British photo-booth market, controlling 4,700 sites, about 90 per cent of the national total. It is not classed as a monopoly as regulators consider photography shops as competitors. Photo-Me's other major concentrations of booths are in France and Japan.

In August, the company announced a 32 per cent rise in pre-tax profits to pounds 20.1m, underpinned by sales of its new digital mini-labs. The company said that lower raw-material costs and improved digital technology also helped to boost the bottom line. Photo-Me manufactures the labs through its French subsidiary, KIS, which it bought in 1994.

Yesterday's rise puts the Photo-Me shares on a forward price/earnings ratio of 44.5 times.