Some reasons why stock price is depressed for this historic company(COU)----they may be a near term takeover by some industry giant,and
i think at a high price is a real possibility -------------------------
The Guardian City Page
Courtaulds to break up Hundreds of Midlands jobs to go as one of
the oldest industrial names is threatened
ROGER COWE
02/26/98
The Guardian
Page 021
(Copyright 1998)
THE fibres and chemicals company, Courtaulds, yesterday announced
500 job losses in the Midlands as a prelude to a break-up of the group
which, eventually, could lead to the disappearance of one of Britain's
oldest industrial names.
Jobs will go at the Derby and Coventry headquarters of the chemicals
and fibres operations, where one in five staff will be affected.
Redundancies will take place among research, marketing and
administration staff as a result of Courtaulds buying out the 27.5 per cent
of the fibre activities owned by the German chemical giant, Hoechst.
Cost-cutting measures have also been provoked by poor results. The
company warned yesterday that sales and profits had been hit by the
Asian economic turmoil and the strong pound.
Exports of the new artificial fibre, Tencel , have slumped because of
liquidity problems among buyers in South-east Asia. Profits have also
been slashed on other sales because of the strong pound, which will cost
pounds 25 million in the current year.
Courtaulds is to sell its packaging business, which is expected to raise
pounds 200 million. The specialist paint division will then be floated off as
a new pounds 1 billion public company called International Coatings.
That will leave the rump of the group which specialises in viscose and
acrylic fibres and will continue to trade as Courtaulds, but which will be
vulnerable to takeover by a large chemical and fibre group and possible
loss of the Courtaulds name.
Gordon Campbell, the chief executive, said: "1997 proved a particularly
difficult year. It has concentrated our minds on our strategic options and
the need to free the two businesses to pursue with vigour their individual
strategies."
Mr Campbell said the demerger was based on the same principles as the
1989 separation of Courtaulds Textiles. "Shareholders don't want to
invest in companies which are bundled up in the way that Courtaulds
was," he said.
Mr Campbell believes the two independent companies would be better
able to pursue the right strategies on their own. "The shareholders of a
fibre company would be more likely to see the right deal as being
appropriate than shareholders of Courtaulds as it has been. Also, the
other party to a deal might be less keen to get involved in a group which it
sees as being dominated by coatings."
But he added that the key motivation was to increase shareholder value.
That happened yesterday, as the share price shot up by more than a fifth
after a steep decline over the past six months.
The announcement of the demerger prompted speculation yesterday that
an acquirer could step in to pre-empt the demerger of the coatings
business. ICI, which has built up a leading global paint business in recent
years, was named as one potential buyer.
But Mr Campbell said it could remain independent. "There's no reason
why it shouldn't be a mini Zeneca," he said, referring to the drugs
company floated off by ICI, which has proved too expensive for
predators. "Anyone would have to put an awful lot of money on the
table."
He also suggested the independent fibres business could end up in a
merger with its arch-rival in the Tencel business, the Austrian company,
Lensing. "It would be a good idea but it's not neccessarily going to
happen", he said.
Stretching back
1816 Samuel Courtauld III starts silk weaving business
1830 Addition of mourning crepe manufacture
1891 Samuel Courtauld & Co becomes limited company
1904 Becomes public company after acquiring production rights to |
