Thorn EMI sells security side to managers for pounds 38m

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THORN EMI is to sell 60 per cent of its security business for pounds 38.6m to a management buyout team led by John Nixon, managing director of Thorn Security Group. Financing for the deal has been arranged by Hambro European Ventures. Sir James McKinnon will join the board of the company as non-executive chairman.

The sale is one of the final steps in Thorn's drive to dispose of non-core operations to concentrate on music and rentals. The group is negotiating the sale of part of the defence arm, which has been on the market for some time.

Thorn EMI has retained a 40 per cent stake in the new security company as an investment. The group also has the right to subscribe for a further 2.5 per cent of the enlarged capital in the event of a future flotation or sale.

The management buyout is paying pounds 27.6m in cash and an pounds 11m interest-bearing loan note. Thorn EMI will use the proceeds to reduce borrowings in the short term and to invest in the development of its principal businesses.

Thorn Security Group made an operating loss of pounds 3.5m on turnover of pounds 160m in the year to 31 March. The company has pounds 35.8m of net assets and employs 3,000 people. It will continue to be known as Thorn Security Group.

Sir Colin Southgate, chairman of Thorn EMI, said: 'This sale is a further stage in the streamlining of Thorn EMI. The sale reflects our stated intention to focus on the growth of EMI, Thorn Group - the name now given to the rentals business - and HMV.'

He said keeping a sizeable stake in Thorn Security showed confidence that it will prosper and earn a good return when floated or sold.

Thorn EMI made a pre-tax profit of pounds 326.5m in the year to 31 March, compared with pounds 273.5m the previous year. It said it was interested in diversifying into book publishing through acquisition.