His previous outing having attracted fans, GR ushers in the site's new look...
Still no real comment from our eagle-eyed city scribblers about the continuing value destruction happening at Cadbury (nor the fact that their chair designate Roger Carr is heavily conflicted [Ed: hope you are prepared to expand]), though the Daily Telegraph did note rather lamely that they might be having trouble getting funding for the deal. I would have thought the demise of Bear Stearns has completely scuppered this, but no: the good ship Goldman’s, Stitzer & Hanna sail on oblivious to all.
To his credit the Daily Mail’s Alex Brummer (18/03) has suggested that it may not be a good deal. But has anyone noticed? The “share owner” meeting to approve the nonsensical demerger has been called for April 11th with the website confidently predicting investment grade capital structures for this. Yet who wants BBB / BBB- rated assets in today's world? I note that the press release makes no mention of interest cover (just the endlessly abused to meaninglessness EBITDA). The cost of this exercise in fees alone would have completely refurbished the Bourneville plant and, perhaps, stopped transfer of production of the eponymous chocolate to Poland.
As suggested in this blog recently it appears that the Somerfield's sale is in trouble with reports that it has been left on the shelf with only one buyer, the Co-Op, reportedly interested in the whole chain (& not at the prices suggested). And given that the business only returned to profit this year and made a meagre profit of £26.4m an asking price of something less than a £1bn might be more in order…
Checkout Time for Tchenguiz?
Co-incident with the bad news over at Somerfield Tchenguiz's Laurel pub group is close to administration and M&B shares in which he owns / speaks for 23% of took another pasting this week when downgraded by Lehman... [This scribe is a very minor holder of M&B.]
Another great British engineering company about to be dismembered is Smiths. Rushed into a sale of its Aerospace business to GE in May 2007, as one analyst noted at the time, the best part of the business was being offered. That business should never have gone on the block.
However, what remains is not to be sniffed at and the previous management did manage to extricate themselves from a joint venture with GE (entered in to at the time of the aerospace sale) for their security scanning business, a growth business if ever there was one.
Still, Smiths' days as an independent company must be numbered since the board chose to appoint Philip Bowman as Chief Executive - an individual whose only motivation appears to be in a sale of the business. He announced decent half year results this week with sales and operating profits both up by 7% despite a flat performance from Medical. To prove his credentials a package with a one month notice period and no share options might be in order, chances of this happening? Zero!
Amongst all the turmoil in the credit markets one major player has been conspicuously quiet. This despite some aggressive practices in the GE Money division which includes home loans there has been barely a peep, granted they sold a US sub-prime mortgage business last year but one does wonder that given their huge asset base and financing requirements that no mention has been made good or bad as to their funding position.