Stay up to date with notifications from The Independent

Notifications can be managed in browser preferences.

City File: Greggs finds breadwinner

Saturday 16 April 1994 18:02 EDT
Comments

Your support helps us to tell the story

From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.

At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.

The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.

Your support makes all the difference.

THE GREGGS deal to buy the 490-strong Bakers Oven chain from Associated British Foods is beginning to look far more appetising than the stock market expects. Details are not due for a fortnight, but those close to the talks say that the Newcastle upon Tyne group should get it for a net pounds 9m, against predictions of up to pounds 50m. As that will double the size of Greggs - currently valued at pounds 82m - and give it a strong South-east coverage for its cakes and pies, the hitherto unresponsive share price should forge ahead from its present 735p.

DESPITE last week's torrid set of full-year results from Aegis, the media buyer, its recovery potential remains intact. The group was hit by a pounds 40m exceptional write-off, pushing it into an pounds 18m pre-tax loss, pounds 7m more than in 1992. But Aegis has now absorbed the shocks caused by a change in the French laws covering media buying. Away from the limelight it is getting on quite nicely with a sweeping restructuring, guided by the formidable presence of Omnicom, the big US advertising group, which owns 9 per cent of the shares, and Warburg Pincus, the investment bank, which has a further 33 per cent. As Europe's biggest media buyer, Aegis is well placed to take advantage of a likely recovery in the advertising market on the Continent and could make taxable profits of about pounds 30m this year. This would put the shares, up 1.5p to 25p on Friday, on a mere 12.5 times earnings. Buy.

AFTER the boardroom turmoil last year, shares in Alexon, the Dash and Ann Harvey womenswear chain, are attracting a classy following on recovery hopes. A few days ago Phillips & Drew Fund Managers, part of UBS, snapped up another million shares to take its stake to 15 per cent, worth pounds 3.6m. Before last August's rescue rights issue P&D had only 3.4 per cent, so it has been betting heavily on the new management under the former Sears director John Osborn.

P&D never comments on its investments and Alexon's finance director, Mike Jones, admits he does not know what is inspiring them. But he points out that Gartmore and Friends Provident have another 17 per cent between them, so the professionals must think they know something. Those with patience could do worse than follow P&D's example at 43p.

THE CORPORATE cavortings of Waste Management International are getting increasingly absurd. Ever since 20 per cent of the shares in this offshoot of the American WMX company were offered on the London market at 585p in April 1992 they have proven a wayward investment. Up to 763p at one point, they have settled into the sludge and are down to 556p. Rightly, investors feel that the landfill business is too political, the outlook too uncertain, and the supposedly glamourous prospects in the Far East too distant to be worth hanging on for. Sell, especially if there's a blip in the price after the results for the first quarter are reported tomorrow.

THE MARKET is being exceedingly obtuse about Mid-States, the motor parts distribution group. Mid-States covers much of the American Mid-West and owes its London quote to a historic connection with Invesco, which still owns 15 per cent of the shares. Last week's figures showed a 40 per cent growth in earnings per share, but the joy was diluted by a once-and-for-all charge to buy out the earnings-related payments scheme enjoyed by two directors. The shares remain at a mere 101p, barely more than 10 times likely 1994 earnings, yet large operators like Mid-States are increasingly mopping up small firms without the capital required to cope with the increasing range of parts distributors now have to stock.

GOOD things are expected from Danbury, a property group in administration which is gaining a re-listing following a share placing and open offer. This involves the company buying property assets from David Abell's Suter. In return Suter will take a 26.3 per cent stake in the refloated Danbury business. The listing is being handled by SP Angel, which recently handled the listing of IES, a security cameras company. These were listed at 65p and now trade at around 500p on a matched-bargain basis. Any investment in Danbury could be risky - the shares will be dealt only on a matched-bargain basis and may not be very tradeable - but the gains could be significant as some brokers think the net asset value per share of 8.1p is overly conservative.

(Graph omitted)

Join our commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in