Thorn EMI sells light fittings arm: Focus narrows as Middle Eastern group pays pounds 162m for business
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Your support makes all the difference.THORN EMI, the music and electronics group, yesterday took another important step to refocus its activities by selling its light fittings business for pounds 162m to Investcorp, a Middle Eastern investment group.
Thorn will receive pounds 137m in cash and pounds 15m in loan notes, maturing over the next seven years, for the business, and will retain a 12 per cent stake.
The move is part of Thorn's strategy to concentrate on recorded music and consumer electronics rental. Earlier this year it sold a 59 per cent stake in Thames Television for pounds 58m and a fire appliances business for pounds 40m to Williams Holdings, the industrial conglomerate.
Thorn is also understood to be in talks to sell its defence arm to GEC for about pounds 140m. The group also owns a security and electronics business, which it said could be sold under the right circumstances.
The lighting business was originally part of a bigger lamp manufacturing and fittings operation. The lamps business was sold to a US company in January 1991, since when Thorn has been looking for a buyer for the remainder.
The sale will result in an after-tax exceptional gain estimated at pounds 44m, but this will translate into a pounds 43m charge under new accounting rules covering goodwill adjustments. Thorn said this would be largely offset by the gains of about pounds 34m arising from the disposal of its Thames TV interest to Pearson in April.
The lighting business, headed by Hamish Bryce as chief executive, improved its operating profits by a fifth to almost pounds 17m in the year to 31 March. Turnover was pounds 344m, of which a third came from Britain. Net assets before deducting intra-group borrowings were about pounds 115m last year.
The sale agreement provides for Thorn Lighting to continue to use the Thorn name worldwide in connection with light fittings.
Sir Colin Southgate, group chairman, said: 'This disposal is another step in Thorn EMI's strategy of focusing on businesses with world leadership positions.'
The proceeds of the sale will be used to reduce group debts. A spokesman estimated that borrowings as a proportion of net assets would fall by 10 points to about 40 per cent.
Last month, the group reported almost doubled taxable profits to pounds 290m for the year ended 31 March, thanks to a strong maiden contribution from Virgin Music Group, acquired from its founder Richard Branson last year.
Investcorp was founded with financial backing from wealthy Middle Eastern businessmen about 10 years ago. Since then it has invested about pounds 3.5bn in almost 50 business ventures. It owns about 12 companies worldwide, including a controlling stake in Gucci and Saks Fifth Avenue, the US retailer.
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