Williams buys arm of Hunting

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The Independent Online
HUNTING, the defence contractor and engineer, has sold a subsidiary to Williams Holdings for pounds 19m to reduce debt.

Shares in Hunting jumped 13p to 233p yesterday as the stock market took the news of the disposal of Hunting Specialist Coatings as confirmation that the dividend will be maintained for the year to 31 December.

The shares are now at a three- year high, having risen 53 per cent from a three-year low two- and-a-half months ago. The market is confident that Hunting will pay a 10p total dividend.

Williams has bought brands including Hammerite, an anti-corrosion metal paint, and Waxoyl, which is widely used to prevent rust on the underside of cars.

Hunting has also spent pounds 5m on three small acquisitions for its oil and defence divisions.

Ken Miller, Hunting's chief executive, said the business sold was one with a high street retail market that needs expensive marketing to develop. He said it was the only part of Hunting exposed to the retail trade and that the group's priorities lay elsewhere.

Hunting Specialist Coatings is based in Northumberland and has distribution companies in North America and Spain.

'The sale will enable Hunting to reduce debt and to continue its planned focusing of resources on the core businesses in defence, aviation and oil divisions,' Mr Miller said.

Sandy Morris, an analyst at Natwest Securities, said the disposal will reduce the ratio of debt to equity from 68 per cent to about 48 per cent.

Williams has paid the equivalent of net assets plus pounds 10.4m. It has also taken on some debt, taking the total payment to pounds 19m. The coatings side made pounds 1.2m profit last year after pounds 900,000 of one-off restructuring costs. Turnover was pounds 23.9m.

Adding back the pounds 900,000 restructuring costs, and after tax, the price is 14 times 1992 profit.

Brian McGowan, Williams' chief executive, said the cash payment would have a negligible effect on borrowings. Debt is about pounds 130m, or 35 per cent of net assets. Williams shares fell 2p to 342p.

Williams owns Polycell do-it- yourself products and Cuprinol wood preservers. The deal should be too small to have much impact on 1993 profits, forecast by Smith New Court to be pounds 172m, up from an estimated pounds 152m in the year to December 1992.