View from City Road: Cowie fails to sell itself

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The Independent Online
FOR a company that is used to selling cars, T Cowie has made rather a bad job of selling itself during its attempt to take over Henlys. For starters, the Takeover Panel has ripped its offer documents apart, unmasking numerous faults. Cowie has not been served well by Noble Grossart, its financial advisers.

Secondly, the usual industrial logic arguments wielded by Cowie are far from solid. It is true that both companies are car dealers, but Cowie is heavily into leasing while Henlys concentrates on selling. Both are also involved in buses and coaches. However, Cowie is unlikely to be able to bring much benefit to Henlys' revamped Plaxton factory in Scarborough.

Moreover, the timing of the bid is unfortunate. With hindsight, Cowie should have moved earlier, before Henlys was able to demonstrate to long-standing institutional shareholders that its problems - highlighted in March when the company announced appalling results for 1991 - were a thing of the past.

Cowie, through no fault of its own, also made its move just before the heart was torn out of the stock market. Its revised offer, while substantially increased in terms of the number of shares on offer, was worth little more than the original one. The exit multiple for Henlys, based on pounds 4m pre-tax for 1993, is still an unattractive 8.8 - not nearly enough.

There is no doubting Cowie's corporate quality. And there is every reason for investors to buy its shares, which look set to rise sharply if the bid fails. Cowie might then find a saving grace in becoming a 'white knight' for Trimoco, under siege from Hartwell.

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