Cantillon

Inside the world of business

Man United fails to score

MAN UNITED’S second stock market outing looks like an own goal for the Glazer family, who took it private in a leveraged buyout in 2005, the legacy of which is a €557 million debt. The Glazers and the company that owns the club yesterday sold 10 per cent of the business for $14 a share, a total of $233 million, on the New York market.

The asking price was far below the $16 to $20 range originally mooted. Half of what was raised yesterday will go towards paying off its debts; the Glazers will pocket the rest.

The share price had barely moved by 6.30pm Irish time, when it was at $14.01. Analysts were lukewarm about owning a piece of football history. Morningstar’s Kenneth Perkins, who specialises in consumer stocks, priced the shares at $10 and told Bloomberg he felt most of the risk was downside.

Others suggested that they might have fared better if they had gone to the Singapore market, as originally intended.

Home Payments refund

ONE YEAR on from the demise of home budgeting service Home Payments Ltd, customers who lost their money in the company’s collapse are now in line to get some of their funds back. However, plans for regulation in the sector have yet to take shape.

When the company went to the wall, it owed €6.7 million to 2,300 customers. The liquidators recovered some €2.1 million, and the High Court has now approved the distribution of €1.2 million of this to customers.

As a result, customers can expect to get about 18 per cent of their funds back now in an interim payment, with an additional payment likely bringing their total reimbursement up to about 25 per cent.

While any recovery of the lost funds will be welcome, the unfortunate situation might have been avoided if companies operating in the budgeting/debt management sector were regulated to begin with.

At the time of Home Payment’s collapse, there were many calls for formal regulation of the sector, particularly given the often vulnerable nature of people seeking out such services.

While the Central Bank completed an audit of companies providing debt management advice in Ireland earlier this year, with the focus on ensuring that companies were reconciling and dispersing client funds daily, regulation is not here yet.

With formal debt management processes on the way via the new personal insolvency regime, it is timely for the advisers involved to come under formal oversight also.

With a Bill providing for such regulation at committee stage, it is hoped that legislation will be enacted when the Oireachtas resumes in the autumn.

Kingspan buys on the double

KINGSPAN HAS been signalling for a long time that it was in the market for acquisitions, so it was no surprise to see that the Cavan-based insulation specialist has decided to take a €96 million plunge in buying two businesses.

The larger of the two is Thyssenkrupp Construction Group, part of the German industrial giant, which is a substantial European manufacturer of insulation panels. The second is Rigidal Industries, a Middle Eastern producer of panels and roofing.

Although it has never actually said so, it has been known since early this year that Kingspan was on the trail of Thyssenkrupp. It was also in the running for a US operation Metl-Span, owned by by Australian group Bluescope.

However, that was ultimately sold to US player NCI Building. Shortly afterwards, at a briefing that followed Kingspan’s annual meeting, chief executive Gene Murtagh said that it had walked away from a deal in the US as the price was too high.

Murtagh has always made it clear the group sees acquisition as a key route to growth, but he has been equally clear Kingspan is only going to buy something if it believes the price is right.

It clearly didn’t in the case of Metl-Span, so presumably it does believe the €65 million it is paying for Thyssenkrupp is good value. The markets seemed to think so: by 4.30pm yesterday its price was up almost 5 per cent.

Thyssenkrupp will strengthen Kingspan’s presence in Europe, adding €101 million in assets, including seven well-invested manufacturing plants. It already has a good continental footprint, partly due to its purchase of CRH’s insulation business in late 2010.

The other element of Kingspan’s announcement, Rigidal, will bring it into the Middle East for the first time. Demand for insulation products is good in both regions: in Europe it is driven by regulations demanding that buildings become more energy-efficient, while in the Middle East it is down to expansion.

It looks like Kingspan’s policy of cutting costs and debt, and its refinancing exercise earlier this year, are set to pay off.