Tomkins to hand back further pounds 400m as disposals continue

TOMKINS, the diversified industrial group, yesterday unveiled plans to buy back pounds 400m of its shares and streamline itself further by selling its lawnmower and bicycle division.

The restructuring will leave Tomkins, which is about to fall out of the FTSE 100 index, with total debt of about pounds 600m and three core businesses focusing on the construction, automotive and food sectors.

The buyback will be in the form of a tender offer for 15 per cent of Tomkins's shares priced in a range of 220p to 250p. It follows a series of share repurchases this year totalling pounds 143m. The market gave a lukewarm response to news of the latest buyback, and Tomkins shares fell by 6 per cent to 221.5p.

The two businesses being sold are Murray Inc, the US lawnmower, snowblower and bicycle company that Tomkins bought for $232m 10 years ago, and its UK mowing machinery business Hayter, bought for pounds 4m.

Tomkins has decided not to sell the handgun company Smith & Wesson, which together with the two lawnmower businesses makes up its professional, garden and leisure products division. Tomkins said it did not believe a series of legal actions against Smith & Wesson in the US seeking to hold it responsible for "negligent distribution" would go against the company.

Greg Hutchings, Tomkins chairman, said the group looked at several acquisition opportunities, including one worth more than $2bn (pounds 1.25bn) but had decided to hand capital back to shareholders because none of the deals would have generated sufficient returns.

He said Tomkins would still have the resources to undertake bolt-on acquisitions after the buyback, although not on the scale of 1997 when it spent pounds 741m, including the automotive components maker Stant.

The buyback price represents a premium of at least 7 per cent to Tomkins's closing price last Thursday, the day before it announced its intention to launch a tender offer.

Mr Hutchings would not be drawn on whether Tomkins will further pare its portfolio of businesses. Its other brands include Bisto, Hovis, Lyons Cakes and Trico windscreen wipers. He denied that there was discord among board members over group strategy, but said it was being reviewed regularly.

Outlook, page 17

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