Thorn to reveal moves for split

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The Independent Online
THORN EMI, the records and Radio Rentals group, will reveal on Tuesday its long-awaited plan to break itself into two separately quoted companies worth pounds 8bn, sources close to the company say.

The group, advised by SBC Warburg and Goldman Sachs, is expected to announce plans to separate its highly rated EMI and Virgin music and HMV stores operations from the more pedestrian TV and electrical rentals division.

Over the past year, Thorn EMI shares have rocketed from pounds 10 to over pounds 16 on hopes of a demerger, confirming its view that the the two businesses will be worth more separately than in a single group.

Analysts reckon the music business, whose assets include songs by the Rolling Stones and Janet Jackson, could be worth pounds 6bn and the rentals side pounds 2bn or more. The agglomerated group is currently valued at pounds 7.2bn at Friday's closing price of pounds 16.69.

Sir Colin Southgate, the executive chairman, is expected to remain chairman of both new companies. Music chief Jim Fifield will be chief executive of demerged EMI, while rentals chief Mike Metcalf will run the rump business.

Analysts are eager to learn how the group debt will be distributed between the two companies and the total cost of the demerger. There are also complex tax implications.

Sir Colin first publicly mooted the idea of a break-up at the annual meeting last July and said the group would announce its decision in early 1996.

Demergers have successfully unlocked hidden value in the past. Zeneca's separation from ICI was a great success, as was the demerger of Vodafone from Racal and Argos from BAT Industries. But, with no hidden stars, Hanson has won few fans for its recent four-way demerger plans.

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