Salvesen boosted by buy-out talks

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The Independent Online
EDWARD RODERICK, chief executive of Christian Salvesen, has discussed a management buyout of the venerable transport and logistics company with US private equity specialists, according to City brokers.

The news comes on top of fresh rumours of a bid for the company, coinciding with a rise in its share price from 83p in mid-April to 130p at the close on Friday.

"There is no consideration being given to the company going private - currently," Mr Roderick said, while not denying the talks had taken place.

City brokers say Mr Roderick also held a general philosophical discussion about management buyouts with Jonathan Michael Fry, Salvesen chairman, this spring. On Friday, Mr Fry said: "There is no plan for a management buyout, or almost none, that's been communicated to me."

Mr Fry attributed the rise in Salvesen's share price to an upward re- rating of companies the size of Salvesen in general, and to Salvesen's diversification into continental European markets in particular. In May, Salvesen bought Gerposa, a Spanish transport and logistics company, for pounds 66.6m.

City brokers say Mr Fry made it clear to Mr Roderick that executives planning to launch management buyouts should resign from their positions first on the grounds that, if they did not, a conflict of interest might arise between their own interest and that of shareholders.

"That is indeed my position," Mr Fry said on Friday.

Alastair Gunn, a transport and logistic company research analyst at Credit Lyonnais who issued a buy note on Salvesen last week, said the company was a logical bid target in a rapidly consolidating sector.

But he cast cold water on the idea of a management buyout. "The current management only came in two years ago," he said. "The company would be better off in doing the right thing by the City and building its business or going for a bid from outside," he said.

Three years ago, Salvesen fought off a hostile pounds 1.2bn bid from the distribution, recruitment and office-support services rival Hays. The bid did not appeal to the 500 members of the Salvesen family in the UK and Scandinavia who control approximately 40 per cent of the company's shares.

To fight off the bid, Salvesen spun off its power-hire business, Aggreko. But the family, led by 57-year-old Alastair Salvesen, who owns an estimated 7.5 per cent of the company, remains the dominant force in the company.

City brokers say some members of the Salvesen family would be willing to sell their stakes in the company, but that such a sale would crystallise enormous capital gains. "Many of the shares have been passed down the generations at a book value of 3p or 4p," one said.

Salvesen family members would like to roll their company into a new owner offering paper generating a safe, solid return, City brokers say. "It's an extraordinarily difficult situation for the professional management," one broker said.

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