Pubmaster gets ready for the break-up of Brent Walker

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The Independent Online
The machinery to break-up the financially troubled Brent Walker leisure group is about to be kicked into gear. Pubmaster, the subsidiary that owns 1,900 pubs, is in the final throes ofappointing a stockbroker, as a precursor to cutting loose from Brent's parental ties and floating on the stock market.

Brent is weighed down with more than pounds 1bn of debts and has been kept afloat courtesy of a complex finance package with numerous banks. The chances of Brent trading out of its financial mess in the next few years are close to zero, and it is understood that the banks are starting to apply pressure to recoup loans by breaking the company up.

Pubmaster is the largest non-brewery owned pub company in the UK. It turned over more than pounds 90m last year and made operating profits of pounds 13.3m, up from pounds 11.3m in 1993. A few hundred of the pubs are leased from Allied Domecq, which also supplies beer through Carlsberg Tetley, its joint brewing venture with Carlsberg of Denmark.

A City source said yesterday that Brent had held exploratory talks with several brokers and was close to drawing up a short-list for a "full beauty parade". Brent declined to comment.

The listing of Pubmaster on the stock market may well happen before next summer, to be followed soon after by the flotation of William Hill, the UK's second largest betting shop operator and Brent's other main subsidiary.

Brent's equity is a worthless currency. Shares in Brent, once run by George Walker, went over the cliff at the end of 1989. From a level then of 400p, the share price has been in single figures from the best part of four years and they currently trade at 2.75p - valuing Brent at just pounds 10m, which is equal to less than 1 per cent of the sum total of its debts.

Elsewhere in the City, investors had their minds more on the holiday season than on business, although there was still plenty of takeover gossip doing the rounds.

The FT-SE 100 share index fluctuated between a fall of 3.5 points and a gain of 11.9, before closing just 1.3 higher at 3,432.9. Volume trading amounted to fewer than 580 million shares, which is not the sort of business that bonus cheques are made of.

Investors were not tempted despite a steady overnight performance on Wall Street and an early 33 point gain in the Dow Jones index yesterday afternoon.

The speculative takeover pot, though, was kept boiling by several rumours of imminent deals, from within the confines of the City and from industry circles

There was a strong rumour that the Stock Exchange was pushing Smith & Nephew to make a formal statement about whether it was in bid talks. Johnson & Johnson of the US has been widely tipped to be ready to make a pounds 2.6bn bid for the UK maker of household goods.

Smith's shares, however, slipped 4p to 199p. Dealers had expected Johnson to make its move yesterday, and investors were quite content to take some profits on the shares, which have risen by a third this year. More than 5.6 million went through the books.

Elsewhere, an industry source said that Hillsdown Holdings was casting an acquisitive eye over Hobson, the food group headed by the youthful Andrew Regan.

Hillsdown, up 1p to 194p, recently topped up its bank account with the pounds 304m disposal of its 56 per cent stake in Canada's Maple Leaf Foods. Hobson shares trade at 26.5p, and it is valued at pounds 103m, which is less than the pounds 106m the company paid last year for the food manufacturing side of the Co-operative Wholesale Society.

Medeva, the drugs group that recently failed to cement a deal with Fisons, was thrust back into the bid spotlight. Shares rose 9p to 248p, at which the group is worth more than pounds 700m.

More than 4 million Medeva shares were traded. Rumoured names in the frame include SmithKline Beecham, which announced figures yesterday and firmed 1p to 562p, and Zeneca, also 1p better at pounds 11.17p.

On the tangible bid front, Scottish Power bought another 1.8 million shares in Manweb, taking its holding in the pounds 1bn takeover target to 9 per cent.

Scottish Power gained a penny to 311p and Manweb eased 2p to 915p, the market firmly believing the bid price of 949p is a full one. Most of the other regional electricity companies, which rose sharply on Monday after the Manweb bid was launched, eased a couple of pence.

Bids or no bids, today's business is set to be enlivened by results from four heavyweights - Reuter, BAT Industries, BT and Lloyds Abbey Life.

Reuter was a strong market yesterday, rising 18p to 556p. Credit Lyonnais Laing is a strong buyer, rating the company's strategy and growth prospects highly.

Lloyds Abbey Life eased 3p to 405p, BT shed just 0.5p to 408p, and BAT advanced 9p to 505p.