Sugar heading towards bitter exit from City: The Amstrad boss has tired of life in the public glare. Neil Thapar reports

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The Independent Online
CONTROVERSY has never been far from Alan Sugar, Britain's best-known former market trader and the founder of Amstrad, the consumer electronics group. There was more drama last week when Mr Sugar revealed that he was considering taking the company private with a proposed pounds 110m offer for the 65 per cent that he does not own.

At the height of Amstrad's success in the late 1980s the company was worth about pounds 1.3bn, with Mr Sugar's personal stake estimated at around pounds 500m. Ranked among the country's richest, he had a fleet of expensive cars and houses in Essex and Florida.

But the past few years have been tough for Amstrad because of the sharp downturn in consumer spending, which has slashed demand for its personal computers. Mr Sugar's paper fortune has shrunk dramatically with the slump in the company's stock market worth from 220p a share to 27p last week.

The decline has caused deep bitterness among shareholders, and they have now been further annoyed by what they believe is an attempt by Mr Sugar to buy the company on the cheap at the bottom of the recession.

Later this week, Amstrad is expected to report an unprecedented pounds 75m loss for the year, and there is a growing fear that it will pass the dividend. The results are likely to be accompanied by further details of the buy-out plan. But there is also market speculation that the company may attract an offer from the Far East because of Amstrad's brand name and its established distribution networks.

Unlike many fallen stock market heroes, Mr Sugar has so far survived the recession. And Amstrad is estimated to have amassed a cash pile of more than pounds 100m by dumping its computers at a loss.

But that decision to cut prices dealt a considerable blow to Mr Sugar's pride. Born to a working class family living in a council flat - his father worked in a garment sweatshop - Alan Michael Sugar failed his 11 plus and went to secondary school in Hackney, London.

Since then, he has often projected a public image of a street-wise trader who cut his teeth selling car aerials at the age of 19.

In a speech to the City University Business School in May 1987, he said: 'Amstrad culture is all about realism, swift thinking and decision-making without committees. Rise or fall by your own decision or get out.'

'Pan Am takes good care of you. Marks & Spencer loves you. Securicor cares. IBM says the customer is king. At Amstrad, we want your money,' he told the audience.

Mr Sugar's pounds 110m buy-out proposal would enable him to buy the group's unsold stocks, a profitable satellite receivers business, the Amstrad and Fidelity brands and an international distribution network for little more than its cash.

City analysts, for whom Mr Sugar has never shown much respect, are spitting blood. 'The price is very low and will be viewed in the City as a final insult,' one said last week.

Relations between City investors and Mr Sugar have always been uneasy and, with the company's fall from grace, they have steadily soured. Matters came to a head in March 1991 when Mr Sugar sold about 42 million Amstrad shares, 7 per cent of the total, at 79p - a price close to the 1991 high - for a profit of pounds 34m. His reason for the sale was that the funds would be used to invest in property.

It later transpired that he wanted to rescue Tottenham Hotspur Football Club, where his father used to take him as a child, from financial collapse. But Mr Sugar, now the chairman of Tottenham Hotspur plc, has often insisted that his pounds 7m investment for a 48 per cent stake was for business reasons.

It appears to have paid off, as Tottenham has been turned round from a pounds 1.8m loss to a pounds 2.7m pre-tax profit in the year to 31 May.

However, his share sale at Amstrad was a shock to the City as, a month earlier, the company had reported a one-third improvement in interim pre-tax profits to pounds 40m, although the figures were accompanied by a grim trading statement.

The disposal demolished any recognition the City had for the man who took on IBM by slashing prices and bringing the word processor to the masses.

Since the company's flotation in 1980, Mr Sugar has found being the boss of a publicly-quoted company mildly irksome. Along with entrepreneurs such as Richard Branson and Sir Andrew Lloyd Webber - who have since taken their companies private - he felt detached from some City professionals.

'They get on my bloody nerves,' he told the late David Thomas, who wrote his biography in 1990.

'There are people who get to the office at 9.30, read the FT until 10.30, then they have tea and biscuits and at 11.00 they do their bit of brilliance for the day. At 11.55 they down their pen and go out to lunch, roll back at 3.30 and have a final bout of brilliance and that's it,' he said.

Friends say that his unease with City bankers and brokers is one factor in his decision to take the company private.

While Amstrad was riding high on the consumer boom, it was worth putting up with the pressures of being a public limited company. But Amstrad's problems have prompted Mr Sugar, the outsider, to step back from the public glare.

In addition, he feels that the stock market has been undervaluing the company, and by going private, he will have the freedom to restructure its business.

Moreover, there is little need for Amstrad to stay public. To its credit, it has never called on shareholders for additional funds and still has no need for fresh funding.

(Photographs omitted)