Rank reaps pounds 1bn from disposal of Xerox stake

Magnus Grimond

Rank, the Butlin's to Tom Cobleigh pubs leisure group, yesterday surprised the stock market by announcing the sale for up to pounds 1bn of its 20 per cent stake in the Rank Xerox copiers joint venture some six months ahead of expectations. The deal, first mooted last August, prompted speculation that Rank's chief executive, Andrew Teare, will mount a big acquisition, despite plans announced yesterday to return pounds 250m to shareholders by means of a share buy-back later this year.

News of the deal prompted a 26p rise in Rank's shares to 448.5p, but analysts remained concerned that the group may be tempted to splash out. One said: "Rank with pounds 1bn is a bit like a child with a loaded gun. The group has been under pressure to pay back money to shareholders for some time. A quarter of a billion [pounds] is the least they could get away with and that's why the shares have gone up."

He said the group's pounds 113m acquisition of Tom Cobleigh last September had been done at what looked a very high price. The group might now go after Surrey Free Inns, or another small pub chain, but he "wouldn't put it past them" to have a go at something bigger, like Scottish & Newcastle's struggling Center Parcs leisure village operation. At pounds 800m to pounds 1bn it "would be a very big chunk and if wiser heads prevailed, they wouldn't go ahead with it", he cautioned.

Yesterday's deal involves Xerox Corporation, the American joint venture partner, paying pounds 500m on completion later this month and two further instalments of pounds 220m over the next two years. A further pounds 60m may be payable in 2000, depending on profits. The sale of the stake, which is in the books at pounds 930m, is expected to have a neutral effect on earnings this year. Rank said the balance of the initial consideration not used for the buy-back would be used to reduce debt, which was also around pounds 930m at the end of last year, and "to invest in its leisure and entertainment businesses".

Mr Teare, who has raised around pounds 1.3bn from asset sales since his appointment last April, said the group could now get out of "disposal mode". He added: "A big piece of historic baggage has been dealt with."

Although Rank was seeking add-on acquisitions, he sought to play down talk of anything bigger, saying strict internal targets for return on capital meant they would steer clear of big, expensive deals.

The final sale of the Rank Xerox stake values the joint venture on a broadly similar basis to an earlier pounds 620m deal in February 1995 when Rank reduced its effective interest from 33 per cent to the current 20 per cent.

Last year, Rank hived that off into a subsidiary to maximise the tax benefits of the disposal.

Start your day with The Independent, sign up for daily news emails
New Articles
tvDownton Abbey Christmas special
Arts and Entertainment
Wolf (Nathan McMullen), Ian (Dan Starky), The Doctor (Peter Capaldi), Clara (Jenna Coleman), Santa Claus (Nick Frost) in the Doctor Who Christmas Special (BBC/Photographer: David Venni)
tvOur review of the Doctor Who Christmas Special
News
peopleIt seems you can't silence Katie Hopkins, even on Christmas Day...
News
news
PROMOTED VIDEO
News
i100
Arts and Entertainment
Left to right: Stanley Tucci, Sophie Grabol and Christopher Eccleston in ‘Fortitude’
tvSo Sky Atlantic arrived in Iceland to film their new and supposedly snow-bound series 'Fortitude'...
Arts and Entertainment
Jenna Coleman as Clara Oswald in the Doctor Who Christmas special
tvForget the rumours that Clara Oswald would be quitting the Tardis
Arts and Entertainment
Japanese artist Megumi Igarashi showing a small mascot shaped like a vagina
art
News
The Queen delivers her Christmas message
newsTwitter reacts to Her Majesty's Christmas Message
Arts and Entertainment
tv
Life and Style
fashion
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all