View from City Road: Charter turns intriguing

ANYONE who feels miffed at missing out on the Johnson Matthey placing should consider buying Charter Consolidated instead. The sale of Charter's 38 per cent stake in Johnson has transformed Jeffrey Herbert's industrial holding company from a dull but predictable investment into an intriguing but speculative play. The group's stake in the platinum fabricator meant that half Charter's market capitalisation, 60 per cent of its turnover and 45 per cent of its profits werer tied up in a company over which it had no control. Disposal of that holding leaves Mr Herbert and his team in charge of an assortment of engineering and aggregates-related businesses and about pounds 450m in cash.

The key question now for investors is how well and how fast they will spend it, especially given that the proceeds of the sale are currently earning less on deposit than they did when tied up in Johnson Matthey.

One option is to buy in the 36 per cent stake in Charter held by Minorco, the European investment arm of the giant Anglo/De Beers empire, at a cost of around pounds 250m. This would be a neutral option; mildly enhancing earnings but, with a pro forma net asset value of around 550p against a share price of 650p, probably diluting assets.

The assortment of businesses left after the disposal of the Johnson Matthey stake provides a few clues as to alternative courses of action. The jewel is Pandrol, which would account for around 40 per cent of profits following the deal. It is the world leader in the specialised rail fastenings business. Cape, Charter's building products business, which specialises in fire-resistant board, also has a good record, but less successful are the group's UK quarries and US coal mining interests.

There has also been talk of a bid for Vickers, the Rolls-Royce cars and Challenger tanks group, which has a market capitalisation of around pounds 320m. Mr Herbert's background at British Leyland and GEC would give him tools to tackle this nut.

Buying Charter's shares is an act of faith in its management. Mr Herbert has undoubtedly made a good impression, thanks to the skill and determination with which he forced through the Johnson Matthey sale. At 655p the shares make an interesting addition to a speculative portfolio.

(Photograph omitted)

PROMOTED VIDEO
Arts and Entertainment
Jerry Hall (Hand out press photograph provided by jackstanley@theambassadors.com)
theatre
News
peopleFormer civil rights activist who was jailed for smoking crack cocaine has died aged 78
Sport
Manny Pacquiao lands a blow on Chris Algieri
Pacquiao retains WBO welterweight title – and says he wants Mayweather next
Arts and Entertainment
tv
Arts and Entertainment
Carrie Hope Fletcher
booksFirst video bloggers conquered YouTube. Now they want us to buy their books
News
ebooksNow available in paperback
Arts and Entertainment
Damien Hirst
artCoalition's anti-culture policy and cuts in local authority spending to blame, says academic
News
i100
Sport
premier leagueMatch report: Arsenal 1 Man United 2
Arts and Entertainment
Kirk Cameron is begging his Facebook fans to give him positive reviews
film
Arts and Entertainment
Jason goes on a special mission for the queen
tvReview: Everyone loves a CGI Cyclops and the BBC's Saturday night charmer is getting epic
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Reach Volunteering: Trustee – PR& Marketing, Social Care, Commercial skills

Voluntary Only - Expenses Reimbursed: Reach Volunteering: Age Concern Slough a...

Reach Volunteering: Charity Treasurer

Voluntary Only - Expenses Reimbursed: Reach Volunteering: Crossroads Care is s...

SThree: Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...

Ampersand Consulting LLP: Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

Day In a Page

Mau Mau uprising: Kenyans still waiting for justice join class action over Britain's role in the emergency

Kenyans still waiting for justice over Mau Mau uprising

Thousands join class action over Britain's role in the emergency
Isis in Iraq: The trauma of the last six months has overwhelmed the remaining Christians in the country

The last Christians in Iraq

After 2,000 years, a community will try anything – including pretending to convert to Islam – to avoid losing everything, says Patrick Cockburn
Black Friday: Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Britain braced for Black Friday
Bill Cosby's persona goes from America's dad to date-rape drugs

From America's dad to date-rape drugs

Stories of Bill Cosby's alleged sexual assaults may have circulated widely in Hollywood, but they came as a shock to fans, says Rupert Cornwell
Clare Balding: 'Women's sport is kicking off at last'

Clare Balding: 'Women's sport is kicking off at last'

As fans flock to see England women's Wembley debut against Germany, the TV presenter on an exciting 'sea change'
Oh come, all ye multi-faithful: The Christmas jumper is in fashion, but should you wear your religion on your sleeve?

Oh come, all ye multi-faithful

The Christmas jumper is in fashion, but should you wear your religion on your sleeve?
Dr Charles Heatley: The GP off to do battle in the war against Ebola

The GP off to do battle in the war against Ebola

Dr Charles Heatley on joining the NHS volunteers' team bound for Sierra Leone
Flogging vlogging: First video bloggers conquered YouTube. Now they want us to buy their books

Flogging vlogging

First video bloggers conquered YouTube. Now they want us to buy their books
Saturday Night Live vs The Daily Show: US channels wage comedy star wars

Saturday Night Live vs The Daily Show

US channels wage comedy star wars
When is a wine made in Piedmont not a Piemonte wine? When EU rules make Italian vineyards invisible

When is a wine made in Piedmont not a Piemonte wine?

When EU rules make Italian vineyards invisible
Look what's mushrooming now! Meat-free recipes and food scandals help one growing sector

Look what's mushrooming now!

Meat-free recipes and food scandals help one growing sector
Neil Findlay is more a pink shrimp than a red firebrand

More a pink shrimp than a red firebrand

The vilification of the potential Scottish Labour leader Neil Findlay shows how one-note politics is today, says DJ Taylor
Bill Granger recipes: Tenderstem broccoli omelette; Fried eggs with Mexican-style tomato and chilli sauce; Pan-fried cavolo nero with soft-boiled egg

Oeuf quake

Bill Granger's cracking egg recipes
Terry Venables: Wayne Rooney is roaring again and the world knows that England are back

Terry Venables column

Wayne Rooney is roaring again and the world knows that England are back
Michael Calvin: Abject leadership is allowing football’s age-old sores to fester

Abject leadership is allowing football’s age-old sores to fester

Those at the top are allowing the same issues to go unchallenged, says Michael Calvin