Thorn leaps on bid
Wednesday 08 April 1998
Thorn was forced to issue a statement by the Stock Exchange to explain a sharp rise in its share price. It is understood that the Exchange has now launched an investigation into recent share dealings in the company.
Thorn refused to identify the potential bidder, although the City speculated that a financial buyer might be tempted to mount a bid for the cash-generative business and then sell off the unwanted parts. American buyers may also see Thorn as an under-valued asset.
At yesterday's closing price, up 60.5p to 221p, Thorn is valued at pounds 824m. This is almost half its value when it was de-merged from EMI, the music group, in August 1996. Thorn's share price has been devastated by poor UK trading as well as US litigation over credit terms on rent-to-own deals.
Analysts said a bid would be a surprise given Thorn's problems. "It's nearly impossible to value the business because of falling profit expectations," one analyst said.
Thorn confirmed yesterday that it was already planning to break itself into two by selling its US business as part of a fundamental strategic review of the business designed to help restore profits. It has received indicative offers from American rivals for its US operations. Analysts believe competitors such as Renters Choice, RTO and Aarons are likely to have expressed an interest in buying the business and could also consider mounting a takeover for the whole group.
Granada, Radio Rental's main competitor on the UK high street, said yesterday that it was not behind the bid approach. Analysts said Granada was unlikely to launch a takeover as it would raise severe competition concerns in the UK.
Thorn's profits have been hit by a decline in its core Radio Rentals business, due to a rise in insurance premium tax and a trend for consumers to buy TVs and videos instead of renting them. Growing litigation fears in the US over rental agreements entered into by its 1,400 strong Rent- A-Center chain have also hit the group's share price.
This poor performance culminated in Mike Metcalf, the group's chief executive, leaving the group last February, halfway through a strategic review. He was replaced in February by Steven Marshall, previously Thorn's finance director.
Mr Marshall has set about cutting costs and running the business for cash. Around 90 stores have been closed.
Thorn made pre-tax profits of pounds 171m on turnover of pounds 1.6bn last year. Retail analysts expect profits to fall in the year to March 1998 to around pounds 120m and to pounds 105m the year after.
Outlook, page 21
Emergency call 'started off dumb, but got pretty serious'
Britain First criticised for using actress's memory to draw attention to their 'hate-filled home page'
Thought you'd seen it all after the Jeremy Paxman interview?
Greatest mystery about the hit BBC1 show is how it continues to be made at all, writes Grace Dent
"History is violent," says the US Army tank commander Don "Wardaddy" Collier
- 1 This 'woman calls police to order pizza' story isn't going where you're expecting
- 2 Axe wielding man shot dead after attacking four New York policemen on busy street
- 3 Watch what happened when food critics were unknowingly served McDonald's
- 4 Jimmy Carr's Oscar Pistorius joke goes a bit too far at the Q Awards
- 5 Ottawa shootings: Bruce MacKinnon's cartoon is the perfect tribute to soldier Nathan Cirillo
Renee Zellweger on plastic surgery rumours: 'I'm living a more fulfilling life and I'm thrilled that perhaps it shows'
This 'woman calls police to order pizza' story isn't going where you're expecting
FCKH8: YouTube reinstates provocative anti-sexism video showing young girls swearing
Axe wielding man shot dead after attacking four New York policemen on busy street
Diwali: What is the festival of lights – and how is it celebrated around the world?
Of course, teenage girls need role models – but not like beauty vlogger Zoella
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Support for EU membership 'at highest level since 1991' with most Brits wanting to stay 'in'
Thousands with degenerative conditions classified as 'fit to work in future' – despite no possibility of improvement
Residents should throw a street party and mix with immigrant neighbours, councils told
Attacks on 'Ukip Calypso' show how skewed people’s priorities are
iJobs Money & Business
£30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...
£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...
£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...
£100 - 125k: Guru Careers: A CTO / Chief Technology Officer is needed to join ...