Thorn sells US business for pounds 545m
Thursday 18 June 1998
Thorn shares rose 10 per cent in early trading before the announcement was made. The sharp movement is likely to lead to a Stock Exchange inquiry as to whether news of the impending deal had leaked. Thorn shares closed 10.5p higher at 220p after touching 237.5p at one stage.
Under the terms of the deal Thorn will have no continuing liability arising from the class action brought against the company in the US. The only exception is in the states of Minnesota and Pennsylvania where Thorn has already taken a pounds 23m provision to cover the expected costs. Thorn has been taken to court in several states over its "Rent-to-Own" offers, which have been claimed to be misleading.
Thorn said it intended to return most of the proceeds of the sale to shareholders, though analysts said this might not take place until next year.
Commenting on the deal Thorn chief executive, Steve Marshall, said: "This agreement gets the implementation of our strategy to crystallise value for shareholders off to a strong start." He said management would now concentrate on the disposal of the remaining overseas Thorn businesses in Scandinavia and Asia-Pacific, which were all put up for sale last month. This process is expected to take six to 18 months.
The company will then focus entirely on its UK operations, which include Radio Rentals, Crazy George's and DER Direct.
Ashley Thomas, retail analyst at SG Securities, said: "The business is still a bit of a rag-bag. But the price on this deal was higher than forecast and it ringfences Thorn from the litigation liability in the US."
Rodney Forrest at CL Securities Europe was also positive. "I thought they would either get a lower price or be saddled with a larger proportion of the liabilities going forward," he said.
He expects a pounds 500m redistribution to shareholders. This is equivalent to 134p per share, which would leave the company with borrowings of around pounds 200m.
Thorn America trades from 1,400 outlets under the Rent-a-Center, Remco and U-Can Rent brand names. The business recorded operating profits before exceptional items of pounds 63.4m on turnover of pounds 561m.
Thorn said nothing about the bid approach made for the whole of Thorn in April, which was understood to have come from the Barclay brothers. Mr Marshal said there was "nothing new to say", but analysts said that if the talks had been called off the company would have been obliged to issue a statement to that effect.
As well as its problems in the US, Thorn has been struggling in the UK where it has paid the price for over-expansion. It is now cutting back on product selection and reducing costs. Last month Thorn reported a 30 per cent fall in annual profits to pounds 118.2m and a 2 per cent decline in sales to pounds 1.25bn.
- 1 Russell Brand accuses FOX News anchor Sean Hannity of terrorism after aggressive Israel-Gaza debate
- 2 Pope Francis issues top 10 tips for happiness – including don’t try to convert other people
- 3 Disney heiress Abigail disowns her share of family profits in West Bank company
- 4 The secret report that helps Israel hide facts
- 5 Israel's propaganda machine is finally starting to misfire
Russell Brand accuses FOX News anchor Sean Hannity of terrorism after aggressive Israel-Gaza debate
Pope Francis issues top 10 tips for happiness – including don’t try to convert other people
Sabina Altynbekova, the girl branded 'too good looking' for volleyball, says social media obsession with her is a 'bit much'
Justin Bieber posts Instagram photo of Orlando Bloom crying after Ibiza fight 'over Miranda Kerr'
Disney heiress Abigail disowns her share of family profits in West Bank company
The secret report that helps Israel hide facts
Land for gas: Merkel and Putin discussed secret deal could end Ukraine crisis
Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
A day in the life of Vladimir Putin: The dictator in his labyrinth
Putin is 'thuggish, dishonest and reckless', says British ambassador to US
Richard Dawkins tweets: 'Date rape is bad, stranger rape is worse'
- < Previous
- Next >
iJobs Money & Business
£20000 - £24000 per annum: Harrington Starr: A leading provider of web based m...
£28000 - £32000 per annum: Ashdown Group: Secretary (Sales Team Support) - Mat...
Competitive (DOE): Guru Careers: We are looking for an Assistant Management Ac...
£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...