View from City Road: Fisher renewal is half-hearted

IF FOOD manufacturer Albert Fisher wants to signal a break with the past six months after kicking Tony Millar, formerly chairman and chief executive, off the board with only an pounds 850,000 compensation cheque to comfort him, yesterday's acquisition of Hunter Saphir does little to suggest that intention. Investors can legitimately wonder why Stephen Walls, the new chairman, has bothered spending pounds 29.3m on the company.

Saphir is a commodity importer of fresh fruit and vegetables. It has been reporting falling profits during the past couple of years and for most of the past five years its share price has been steadily heading south, underperforming relative to the market. In short, Saphir seems little different from Fisher itself.

Fisher is offering 42p cash for each of Saphir's ordinary shares, which were suspended on Wednesday at 36p but rose to the bid price in resumed trading yesterday. The preference shareholders get 100p a share, but account for pounds 19m of the pounds 29m acquisition price. Saphir has agreed to recommend that shareholders accept the terms.

Saphir is divided into two parts - the fresh produce in which Fisher is interested and a herb and spice processing division that Fisher says it will try to sell. Mr Walls said yesterday, as all chairmen say when on the verge of an acquisition, that great synergies will come from the merged group. He added that the deal will not dilute earnings this year or next.

If Mr Walls is to be believed, little harm can come of the acquisition. But by the same token it is difficult to see how Saphir will improve Fisher's position. If Fisher has some spare cash lying around it may have been better advised to beef up more profitable business rather than entrench itself in low-margin commodity trading. Mr Walls said that he would rather be number one in products destined for an own-brand label than number two in a branded market. That may be so, but relying on own brand also puts Fisher at the mercy of the viciously price-conscious supermarkets.

Fisher badly needs management reinforcements and is still looking for a chief executive. The fact that Nicholas Saphir, Saphir's chairman and chief executive, will join Fisher's board and oversee the European food businesses is hardly a comfort.