Plessey Co Plc’s first act on acquiring Hoskyns Group Plc was to bestow a UKP25m christening present on its new baby in the shape of the facilities management contract to take over the running of all Plessey’s computer operations. Plessey summoned a group of analysts on Tuesday for what was described by one attendee as […]
Plessey Co Plc’s first act on acquiring Hoskyns Group Plc was to bestow a UKP25m christening present on its new baby in the shape of the facilities management contract to take over the running of all Plessey’s computer operations. Plessey summoned a group of analysts on Tuesday for what was described by one attendee as an idiot’s guide to Hoskyns. The meeting was called primarily to explain the company’s reasons for spending UKP164m on a company that had a turnover of UKP79m for the year to October last. Apart from outlining its new software and computer services arm’s main businesses and forecasting 30% growth, Plessey insisted that it wants Hoskyn’s to retain its Stock Exchange quotation. As we pointed out when the acquisition was announced (CI No 978), that may prove a problem because, as we suggested, the offer price proved so attractive to the outside shareholders that Plessey now owns 97% of Hoskyns’ equity and the exchange does not like less than 25% of the equity of a Full List company to be freely traded. Approximately 3% of the shares remain with what are assumed to be less sophisticated private investors and with the executive directors, who agreed to hold on to most of their 230,000 shares. Another 5% has gone into a trust for the benefit of some 100 senior employees which will be allocated over the next three years, as long as the employees stay with the company. There are no fixed rules on such matters but it is likely that the Stock Exchange will become extremely impatient if Plessey has not unloaded another 17% within the next six months, or at least makes clear its intention to do so. A number of options are open to the company. It may place enough equity shares with institutions to retain the quote, but that is likely to be at a much lower price than it paid. Acquisitions funded by Hoskyns’ stock, thereby maintaining the value of the company, would be a much more attractive proposition, and are therefore likely. Finally it is speculated that Hoskyns, which has always been self-financing, could bid for a very large contract funded by a rights issue. This too would have the benefit of reducing Plessey’s shareholding while maintaining the price of its expensive new arm.
