The Investment Column: BOC is still left with problems
Friday 30 January 1998
The pounds 640m price tag is at the lower end of the initial estimates of between pounds 600m and pounds 800m when the business was put up for sale last July, and well below the pounds 1bn some, rather optimistic, analysts had forecast since.
However the price looks a fair one. Ohmeda made a pre-tax profit of pounds 44.5m in the year to the September 1997, but only pounds 18.4m came in the second half of the year. Assuming a 25 per cent tax charge the exit price represents 19.1 times historic earnings or 23.2 times annualised earnings from the second half of the year, which is not bad for a business with dwindling profits.
And the deal will enhance earnings. The proceeds will be used to reduce borrowings and the interest saved will be worth more to BOC than the expected profit from Ohmeda this year.
However, the sale only solves part of BOC's problems. Chief executive Danny Rosenkrantz has no immediate plans to reinvest the proceeds, or to use the money to buy back shares.
Meanwhile the two main problems which have helped drive the shares down show not signs of easing. The adverse impact of a strong sterling on the group's overseas profits has not reduced, and the effects of the Far Eastern financial crisis on both sales and profits has worsened.
Profits have been static for the last few years and 1998 should be no exception. Analysts who were once expecting profits to reach pounds 490m for the 12 months to September are now looking for just pounds 450m, which puts the shares on a prospective p/e of 15. High enough.
- 1 President of Argentina adopts Jewish godson to 'stop him turning into a werewolf'
- 2 Doctors remove 80 teeth from boy's jaw
- 3 The 'Black Museum': After 150 years, public set to see exhibits from police’s grisly crime museum
- 4 Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations
- 5 Sir Winston Churchill’s family begged him not to convert to Islam, letter reveals
Germany and ECB set for fight over money-printing
Downfall of Dustin 'Screech' Diamond, the 'Saved By The Bell' star charged with bar stabbing
The 'Black Museum': After 150 years, public set to see exhibits from police’s grisly crime museum
Syrian teenager Usaid Barho reveals how he escaped from Isis using a suicide vest
Sir Winston Churchill’s family begged him not to convert to Islam, letter reveals
Millions of Britons struggling to feed themselves and facing malnourishment
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Ukip member gets into Christmas spirit with Union Flag plea to Santa 'for our country back'
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
Nigel Farage: Ukip leader named 'Briton of the year' by The Times
Immigrants make UK racist, says Ukip councillor Trevor Shonk
iJobs Money & Business
Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...
Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...
Not specified: Selby Jennings: SVP Model Validation This top tiered investment...
Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...