Thorn in complete overseas sell-off

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THORN, the struggling Radio Rentals group whose shares have halved since it was demerged from EMI, has put all its overseas businesses up for sale as part of a radical restructuring designed to improve returns to shareholders.

In addition to the American operations, which were put up for sale earlier this year, the company yesterday said it will sell its Scandinavian operations, its Asian interests and its business-to-business division, which operates in 15 European countries.

The sale of the US business which trades under the Rent-a-center and U-Can-Rent names, is at the shortlist stage and should be completed in the next few months, the company said.

The proceeds of the disposals are expected to be returned to shareholders rather than reinvested in the rentals business, which is in long-term decline. Thorn plans to concentrate its energies on its UK Radio Rentals and DER businesses.

Thorn's chief executive, Steve Russell, said the whole break-up process could take up to 18 months. Thorn has made pounds 40m of provisions to cover the restructuring and the costs of pulling out of certain product lines like personal computers and cookers.

However, there were few clues on a possible bid for the whole of Thorn following an announcement last month that it was in preliminary discussions that might lead to an offer. The approach is understood to have been from the secretive Barclay brothers.

"No formal proposal has yet been received and shareholders should not assume that an offer will be forthcoming," the company said. Negotiations are still continuing but are proceeding slowly due to the legal complications in the US, where Thorn is facing litigation over rental agreements.

Analysts were cool on the prospects for a full-scale bid for the whole of Thorn and did not feel the break-up would create much additional value.

SG Securities put a total break-up value of 215p per share on the business compared to yesterday's closing price of 204p, up 0.5p.

Another analyst said. "I wouldn't be surprised if there is nothing left of Thorn in a year's time." With the overseas business being sold and the UK businesses shrinking, the rump of Thorn would be vulnerable to a bid by financial buyers or a management buy-out.

"The UK business is a pig in a poke," one said. "New products haven't delivered sales growth and they are back-pedalling on Crazy George's."

Thorn now plans to extend the lower priced Crazy George's format to just 160 outlets compared to previous forecasts of 250.

The comments came as Thorn reported a 31 per cent fall in full year pre-tax profits to pounds 118m caused by poor sales in the first half and the impact of the insurance premium tax. Thorn admitted that sales in its Radio Rentals outlets were falling faster than those at Granada, the rival chain.

Thorn plans to expand its DER Direct business which operates via a telephone sales centre in Scotland.