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Nomura sells betting chain against the odds.

More than 200,000 disappointed private investors are to get a pounds 20 betting voucher instead of shares in bookmakers William Hill after its flotation was abandoned at the last minute.

William Hill's owner, Japanese bank Nomura, sold the betting shop chain to venture capitalists Cinven and CVC Capital Partners for pounds 825 million on Saturday instead of going ahead with a flotation.

The deal comes after William Hill drastically dropped the price of its share offer after weak demand from the big City institutions. There was enormous interest from the general public, with 220,000 inquiring about the offer.

But the institutions failed to show any interest and Nomura dropped its price on Thursday to 135p.

Yesterday, Mr John Brown, chief executive of William Hill, said private investors would get a pounds 20 voucher. "We know that there are some disappointed investors out there. We're effectively saying thank you for your support, here's a chance to make some money out of us after all."

But stockbrokers were up in arms about the failed flotation and said private investors, who were invited to apply for at least pounds 1,000 of shares each, would be put off parting with their cash in future share offers.

The failed float followed last year's controversial handling of the flotation of Thomson Travel, which saw thousands of private investors unable to receive the shares they requested.

Both offers were run by Warburg Dillon Reed, the investment house.

One analyst said: "Warburg has really got to answer some questions. Surely it should have checked with the institutions before pricing the flotation in the first place."

Mr Justin Urquhart-Stewart, corporate development director of Barclays Stockbrokers, said: "This is a really sad day for the City and for the private investors who stumped up pounds 1,000 each to buy shares.

"Every time something like this happens it puts people off stock market flotations, especially so soon after Thomson."

Mr Brown said private investors "should be complaining to the institutions who failed to support the flotation. It had overwhelming support from private investors but the institutions just didn't want to join in."

Cinven and CVC will each hold 45 per cent of William Hill's equity, with existing management holding ten per cent.

The buyers are paying 150p a share for the company, compared with the 135p revised share offer.

Before Warburg dropped the price of the deal, the flotation was set at an indicative range of 155-175p a share.

Mr Brown said the flotation attempt had fallen victim to the City trend away from investing in small to medium-sized companies.

He said it was possible the City institutions were trying to damage the price their rival Nomura got for the company.

"Perhaps the big institutions were trying to squeeze Nomura to bring the price down. It's been done before," said Mr Brown.

City View/Page 31
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Author:Lindsay, Robert
Publication:The Birmingham Post (England)
Geographic Code:9JAPA
Date:Feb 22, 1999
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