Securicor to seek exit from distribution business

COMPANIES & FINANCE UK: Securicor seeks distribution exit
Financial Times; Jun 1, 2001
By ANDREA FELSTED

Securicor, the security, distribution and communications group, is examining ways to withdraw from its distribution joint venture with Deutsche Post to focus on its core security business.

The group also confirmed that Roger Wiggs, chief executive, would retire this year, to be succeeded by Nick Buckles, chief executive of the security division.

Mr Wiggs said the sale of Securicor’s share of the business, most logically to Deutsche Post, was likely to be in the medium to long term, when the performance of the division had improved and a possible tax liability of up to Pounds 100m removed. “We are committed to exiting that business at some stage,” he said.

He also confirmed that Securicor was in advanced talks to sell Securicor Wireless, its US wireless business, to an unnamed US buyer for Dollars 36m (Pounds 25m).

Analysts welcomed the plans, but expressed disappointment at Securicor’s first-half profits, which fell 32 per cent, partly because of losses in the non-security divisions.

Securicor reported pre-tax profits of Pounds 13.9m in the six months to March 31, against Pounds 20.4m last time, and were below analysts’ expectations. Turnover rose from Pounds 524m to Pounds 702m. Commerzbank Securities cut its forecast of full-year profits from Pounds 50m to Pounds 38.3m (Pounds 47.7m).

Securicor sold 50 per cent of its distribution division to Deutsche Post two years ago for Pounds 236m.

However, since then the business has experienced a number of difficulties. Analysts said the remaining 50 per cent stake could be worth Pounds 200m-Pounds 300m.

Securicor has an agreement with Deutsche Post whereby it can force the German group to acquire its 50 per cent stake in 2004. This would be for fair value plus a premium for control, and would not incur a capital gains tax charge. If Deutsche Post were to buy the stake before 2004 Securicor would incur a tax bill of up to Pounds 100m.

The interim dividend of 0.65p (0.6p) is payable from earnings of 1.3p (2.4p).

Copyright: The Financial Times Limited