Williams sale to lift war chest

 

Fire protection and Chubb security group Williams is pressing ahead with the sale of its North American and European paints businesses in a move that will boost its acquisitions war chest to £500 million.

Talks on the sale of the businesses are under way and the group hopes to conclude deals by the end of the year. The cash raised - expected to be about £250 million - will be used to fund acquisitions, particularly on the security systems and services side, said chief executive Roger Carr.

Williams spent £199 million on acquisitions in the first half and that pace looks likely to be stepped up as the year progresses. 'There are a lot of acquisition targets and we can certainly spend in the order of half a billion,' Carr said.

Shares in the group have been battered this year by its failed merger with US group Tyco International. On-off talks between the two finally broke down in July although there have since been rumours that Tyco may decide to make a hostile move.

Carr is unconvinced, however. 'Tyco have a very clear policy that they do not make hostile bids. If they did, it would be a huge departure from that,' he said.

The distraction of the Tyco talks is reckoned to have cost the group some £5 million in profit over the first half and the results were further hit by a product recall in North America.

Excluding acquisitions and disposals, Williams pushed up its pre-tax total for the six months to end-June by 4% to £122 million on sales up 6% at £1.3 billion. The dividend rises from 6.25p to 6.33p.

The proportion of profits earned from security systems and services rose from 38% to 44%, in line with Williams' target of achieving a 50-50 split with the security products side. While systems and services turned in an 8% increase in underlying profits, the products side's contribution, excluding acquisitions, slid by just over 3%, hit by the carbon monoxide detectors recall in the US.

The shares have fallen from 462p earlier this year to an unchanged 377p today but Carr is confident they are due for a re-rating. 'There is no issue on the results,' he said. 'We have made a major transition and the business is in good shape. But it takes time for the market to recognise this.'