Lonrho’s interests include sugar plantations, African car dealerships, hotels and a range of agricultural operations including cotton, timber, meat processing and brewing. In the UK it owns the Dutton Forshaw car dealerships and Cramlington Textiles.Lonrho said continuing confusion over the status of its largest shareholder, Anglo American, would not divert it from its planned demerger. The EU is currently probing Anglo’s acquisition of a 28 per cent stake in Lonrho, mainly from Dieter Bock, and has barred it from voting its shares pending its investigation into possible competition complications due to the two companies’ interests in platinum.Pre-tax profits rose 13 per cent during the year to September from pounds 151m to pounds 170m before exceptional items. Earnings per share were 34 per cent higher at 11.9p (8.9p) and a final maintained dividend of 3p was recommended, making a total for the year of 5.25p. Lonrho’s shares, which have fallen from a high of 217p over the past year, closed 2p higher at 127p.. Lowndes Lambert and Fenchurch, two of London’s smaller insurance brokers, yesterday announced their long-awaited pounds 97m merger in what analysts said was a move to combat increasing competition in the market.
The deal involves shareholders in Fenchurch swapping 1,000 of their own shares for 628 in Lowndes Lambert, which is to be renamed Lambert Fenchurch. The news sent shares in Lowndes 7.5p higher to 116p, while Fenchurch added 9p to 70.5p.
The link-up, foreshadowed in a statement last week that said the two groups were in merger talks, is part of a growing consolidation trend in the sector in the wake of last year’s marriage of the two US giants Aon and Alexander & Alexander. Aon has also recently picked up Bain Hogg from Inchcape and last month Lloyd Thompson and JIB, two second-line brokers, announced their own pounds 300m merger.Lambert Fenchurch expects to be able to generate pounds 5m of cost savings from the merger in a full 12 months, at an exceptional cost of pounds 11m in this year’s figures. But David Margrett, the Lowndes chief executive who will take on the same role in the new group, denied the move was defensive, saying it offered “very significant income growth opportunities which we believe will lead to earnings enhancement”.Lowndes shareholders will end up with 72 per cent of the enlarged company, while the company will fill the two top management slots, with Sir Robert Clark, the group’s chairman, as well as Mr Margrett retaining their roles. But Mr Margrett dismissed any suggestion that Lowndes would be in the driving seat.
“This is truly bringing together the two senior executive teams. Obviously we are the bigger firm, but there are some existing jobs going to the other side.”Analysts said the merger was a reaction to both declining insurance rates and increasing consolidation in the UK market. Roman Cizdyn at Merrill Lynch said this was a defensive move “and very much a reaction to what the industry leaders are doing, particularly Aon”.. Clyde Petroleum upped the stakes in its increasingly heated pounds 432m bid battle with Gulf Canada yesterday by effectively flagging what it considered to be a fair value price for itself. On the basis of a study by an independent industry consultant, Clyde said a fair trading range for its shares, before any premium for control, would be between 146p and 177p a share. Assuming investors would expect Gulf to pay extra to gain control of Clyde, the company’s calculations suggested it would not be prepared to recommend a take-out price of less than 190p or 200p, well ahead of the 105p that Gulf has so far tabled, and implying a value of at least pounds 782m. Clyde’s shares added 2.5p to 121.5p as the market continued to bank on a higher offer from Gulf or a rival bid from a third party.
As expected, Clyde’s defence focused on valuation methodology, with Clyde insisting that a multiple of cashflow, the method usually used in North America, best measured its potential value.
