Wiseman floats on high multiple

SHARES in Robert Wiseman Dairies, the Scottish milk distributor, have been placed with institutions at 100p, giving the company an initial market capitalisation of pounds 63m.

The placing price is 15 times Wiseman's forecast earnings per share for this year. Shares in Unigate and Northern Foods - the closest quoted rivals - trade at between 10 and 11 times 1994 earnings.

Wiseman was widely complimented in the City yesterday for being efficiently run. However, some doubted that the shares deserved to trade at a 50 per cent premium to peers. One analyst said: 'The road ahead will be a lot tougher than the road behind. To an extent Wiseman is trading on past glories to get away with a price like this.'

The company, founded near Glasgow after the Second World War, is raising pounds 16m by selling a quarter of the equity. It will use the money to fund capital expenditure - particularly its first big venture south of the border. It has bought a Manchester distribution depot and plans a new dairy there.

Wiseman, which decorates its product packaging and distribution trucks to look like a black and white Friesian cow, concentrates on supplying milk to supermarkets.

Alan Wiseman, the chairman, said supermarkets exerted keen price pressure on milk suppliers. However, he said profit margins on milk were better than for produce supplied to make butter and cheese.

He added that Wiseman's attention to low-cost production meant it could widen profit margins. He dismissed the suggestion that Wiseman would expand into supplying milk for dairy produce.

The family owners of the business will receive pounds 4.5m from the float. Mr Wiseman's shares will be worth pounds 23.3m. Those of his brother, the chief executive Robert Wiseman, will be worth pounds 19m. Dealings are expected to start on 28 March.