TONY L
further comments on freeserve
July 11 1999
BUSINESS NEWS
Freeserve looks like a risk
worth taking
FREESERVE is either a crock of gold or the biggest heist
since Brinks-Mat, and tomorrow investors can make up
their own minds. Dixons, the electrical retailer and
Freeserve's parent company, will launch its long-awaited
prospectus for the £1.35 billion to £1.45 billion flotation.
The contents will make gripping reading and any normal
valuation criteria will have to be thrown out of the window.
Freeserve is losing money - and will do for some time -
and has unproven management. It wants to raise about
£300m from selling 18.25% of its equity. Half will fund
expansion, half will go to Dixons. If Freeserve's advisers,
CSFB and Cazenove, are right, there will be lots of
interest, and if City fund managers shy away Americans
will mop up the slack.
John Clare, Dixons' chief executive, said last week buying
Freeserve shares involved taking a gamble on the internet's
future - a risk, but one worth taking.
He is probably right. Freeserve is a pioneer of Britain's
fledgling net industry and has a head start over many rival
free net service providers. John Pluthero, its young chief
executive, conceived the idea and now he has the challenge
of keeping ahead of the chasing pack.
Pluthero is not a cyberspace Dick Turpin; he is an
articulate executive with marketing flair and his rise has
won him respect, not envy, from colleagues over whom he
has leapfrogged.
Freeserve will have a bumpy ride as a public company but
once it can prove that e-commerce can generate valuable
revenues it should start to put solid foundations beneath its
share price. Whether its launch value should be more than
that of a high-street giant such as Debenhams (present
market value £1.6 billion) is another matter.
Manchester United
THE stories that surfaced last week surrounding Martin
Edwards, Manchester United's chief executive, and the
future of his 14% stake in the £560m football club will not
be the last. For two decades bidders have been courting
Edwards. In the early 1980s the late Robert Maxwell
offered £6m. Then in the mid-1980s David Whelan,
chairman of JJB, the sports-shop chain, offered a lot more.
He was followed by Michael Knighton and more recently
by BSkyB, which won Edwards's agreement at £623m
only to have the deal blocked by the Competition
Commission.
Now some new names have been mooted, including the
Sultan of Brunei. If Edwards wanted to sell, now seems
like a good time with United having just won the treble.
Under Edwards's reign, United has become the world's
most profitable club.
Edwards plays his cards close to his chest. Each time he
has concluded a deal he goes to ground for two days
before the announcement and last week he did just that
again. Watch this space.
Liberty International
THE business interests of Donald Gordon, the South
African tycoon, have often seemed as intricate as Hampton
Court's maze. He has moved to simplify things but the
confusion has produced a buying opportunity in Liberty
International, which is listed in London. Liberty owns 72%
of Capital Shopping Centres (CSC), whose assets include
three big retail centres, MetroCentre, Lakeside and
Braehead, now under development. But, while CSC
shares have moved from 337p to 441 1/2p this year,
valuing it at £1.8 billion Liberty has only edged up from
454p to 466 1/2 p
CSC now trades at its historic net asset value; Liberty
stands at a 22% discount.
At this level the City has ignored Liberty's other interests in
financial services and its cash pile. These assets are worth
about £300m. Liberty shares climbed 5 1/2 p on Friday
but they should top 500p.
John.waples@sunday-times.co.uk
Kirstie Hamilton is away
Next page: GE hits back in power game
Next: GE hits
back in power
game
Copyright 1999 Times Newspapers Ltd. This service is provided on Times
Newspapers' standard terms and conditions. To inquire about a licence to
reproduce material from The Sunday Times, visit the Syndication website.
|
