Outlook: Securicor/BT

IT WAS always hard to understand why Securicor had agreed to sell its 40 per cent minority in Cellnet to BT for such an apparently bargain basement price. Now some of Securicor's largest shareholders say they can't make it out either. Unless the company comes up with a better explanation, they are threatening to vote against the transaction at the forthcoming egm.

Pro rata, the stake is costing BT less than half per mobile phone subscriber than the value the stock market attributes to Orange. It is also far less than the value Deutsche Telekom has put on One2One. Cellnet is a less advanced network than both these two, with much poorer growth prospects, but even so, BT seems to have got something of a steal. It is paying far less than these assets might have realised on the open market.

Unfortunately for Securicor, it was unable to engage in any such auction. BT already owns the other 60 per cent and in any case runs the business. It was the only realistic buyer for the stake. Even so, shareholders are right to be suspicious. With Securicor shares trading at a discount to the see through value of the Cellnet sale, the company's other businesses of security services and delivery are in the price for nothing. Just the stuff for an MBO.

It could be that Securicor's position in the negotiation was stronger than it is portrayed as being. We know nothing of the nature of the agreement between Securicor and BT over management and ownership of Cellnet, or over the crucial issue of the future development of mobile. Has Securicor undersold itself? Directors have some awkward questions to answer.