Services

GUS right to defy testy bondholders over demerger

1 Jun 2006

The retailtobusinessinformation company plans to cram all its debt onto one side of the company even though bondholders want a buyback. But this isn't a case of highhanded management railroading bondholders. GUS is actually behaving perfectly reasonably.

Fortress locks up Marconi pension plan

26 May 2006

The hedge fund is paying £346m for Telent, the overcapitalised rump company formed after Marconi sold most of its assets. Nobody has figured how to separate Telent from its overfunded pension plan. Fortress is essentially buying an option.

Compass probe yields little comfort for investors

1 Feb 2006

The catering giant aims to draw a line under allegations of corruption by disclosing the findings of an external investigation. But challenges remain. Whoever steps up to the plate as Compass's new CEO will be taking a lot on trust.

Bally underscores US shareholder impotence

30 Jan 2006

Some 70% of the health club s voting shareholders demanded the executive s head. More voted to block his directors. Yet he s staying put. Just shows that even when investors rise up en masse against management in the US, restrictive bylaws often prevent them from having a say.

Career Education offers lesson in governance

22 Dec 2005

Management of the US operator of private colleges remains in charge despite an overwhelming vote of noconfidence back in May. The situation highlights a big problem with US governance: even when investors issue managers a failing grade, they can t expel them.

Rentokil pension freeze shows way forward

20 Dec 2005

The services group is closing its generous pension plan to current workers. It won t be the last big UK company to make the move. Low investment returns and tougher regulation are killing off defined benefit pensions. Investors should be pleased with the trend.

Compass keeps investors waiting for good news

29 Nov 2005

The catering giant s full year figures suggest it has run out of nasty surprises. Sales grew 7%, and pretax earnings hit expectations. But while Compass remains rudderless and its corruption probe unresolved, sentiment towards the stock is unlikely to improve.

Three cheers for Brambles’ £1.2bn shareholder payout

29 Nov 2005

The business services group will sell half its businesses, return the capital to shareholders and eliminate its dual UK/Australian listing. That looks smart. If Brambles can get a good price for its low growth units, this restructuring should create value for shareholders.

Compass needs a new chairman now

13 Nov 2005

Incoming chairman Sir Roy Gardner may not be freed from Centrica until next summer. Given the mess Compass is in, that s not good enough. Either Gardner should extricate himself now, or Compass should find itself another candidate.

Mooted E11bn TNT bid has more smoke than fire

10 Nov 2005

The Dutch postal firm looks like a perfect private equity or breakup candidate on paper. Reality may prove otherwise. The Dutch state owns 10%. TNT is also big. And by preannouncing a possible offer, the putative bidder has just made TNT bigger.

Can private equity make Compass taste good?

25 Oct 2005

It s not surprising private equity is reportedly eyeing up the UK contract caterer. Its shares just hit at a fiveyear low. But limited potential for gearing and underlying wobbles would make this a tricky one for buyout firms to swallow.

Top Compass executive linked to UN scandal

21 Oct 2005

Links between the UK contract caterer and a UN contractor at the centre of a corruption scandal may have been far closer than suspected. The scandal involves only a small part of Compass's activities. But it could be symptomatic of a wider malaise at the group.

Abandoned Rentokil bid harms Robinson’s credibility

17 Oct 2005

Sir Gerry Robinson has rightly dropped his bid. It was little more than an expensive job application for a vacancy that didn t exist. But the episode has done Robinson no favours at all, raising questions about his greed, his prior track record and his appetite for work.

Compass boss Bailey stands down

28 Sep 2005

Mike Bailey has overseen two profit warnings in a year, and a 30% fall in the contract caterer s share price. He s right to leave. But the timing is lousy. Compass s chairman is standing down too. His replacement Sir Roy Gardner has his work cut out.

Bankers squeeze mega fees from Rentokil

21 Sep 2005

Gerry Robinson wants £58m to chair the support services group. Rentokil is spending almost half that to see him off. The fees look absurdly high. They suggest that Rentokil sees Robinson as a bigger threat than it has so far let on.

Deutsche Post risks overstretch with Exel buy

19 Sep 2005

The German postal group is overpaying for the UK logistics group. And it is doing so before sorting out DHL its last big deal. Deutsche Post may feel it has to move now to avoid being boxed in. But in avoiding that fate, it risks destroying value.

Robinson makes skimpy Rentokil proposal

8 Sep 2005

He wants Rentokil to give away 2.6% of its equity worth £76m plus a salary, in return for having him as executive chairman. And it isn t clear what Robinson would do differently other than pay shareholders a special dividend.

Deutsche Post in talks with £3.4bn Exel

1 Sep 2005

It s won't be easy for the UK logistics firm to repel this approach. Investors have bought up the shares frantically on hopes of an exit. The group now looks pretty fully priced. The real question is what price it can wring from a bidder.

Robinson’s Rentokil approach lacks substance

1 Sep 2005

He would like the services group s top brass to cooperate with him in working up a proposal. But why should they? He wants to replace them. Robinson needs to make a proposal sufficiently credible and appealing to force the board into talks.

Rentokil buyout will be hard to swing

23 Aug 2005

Gerry Robinson thinks he has found a way to buy out the services conglomerate with a miniLBO structure. Perhaps. But it isn't terribly attractive to Rentokil shareholders. They'll only tolerate it if they're completely fed up with current management.