LucasVarity plans move to America
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Your support makes all the difference.LUCASVARITY, the Anglo-US car components and aerospace group, caught the City off guard yesterday by unveiling plans to move its headquarters and primary stock market listing from the UK to the US.
The group, created through the merger of Lucas and Varity Corporation in 1996, argued that most of its competitors are US-based and that switching domicile would put it on a level playing field.
However, the reaction from one large shareholder was non-committal, while the general secretary of the Transport and General Workers Union, Bill Morris, described it as "a vote of no confidence in this country" and expressed fears for jobs.
LucasVarity said that since the merger the proportion of UK shareholders had dropped from 67 per cent to 47 per cent and that US investors owned an equal share of the business.
The change in domicile will be accompanied by a buyback of up to 20 per cent of the group's share capital.
Victor Rice, the chief executive and driving force behind the plan, said the group remained "fully committed" to its UK customers and employees and hoped to keep a large UK shareholder base.
Under the proposals, to be voted on at extraordinary meetings on 6 November, shares in LucasVarity will be exchanged for shares in a new company, LucasVarity Corporation, incorporated in the US with its headquarters in Buffalo, New York and its primary listing on the New York Stock Exchange. The change will need the backing of 75 per cent of those voting.
There will be a secondary listing in London, but LucasVarity will automatically lose its place in the FTSE 100 Index of leading shares. If there is support from more than15 per cent of UK shareholders, LucasVarity Corporation shares listed in London can be swapped for shares in a UK company. This is to circumvent rules which prevent some UK funds from holding non-UK listed shares. The announcement initially hit LucasVarity shares, but they closed up 2.5p to 210.5p.
Outlook, page 17
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