FTSE-100 Index 6609.6 – 8.3 DJ Industrial Average 10,866.70 – 40.64 £=$1.5676 – 0.95 1=£0.6133 – 0.26 BUThursday, MarchS 23,I 2000.N Page TwentyESS Dairy Crest outraged by rival’s move Halifax bid means 200 more jobs Wiseman’s for IF

IAN McCONNELL Deputy Business Editor INTERNET-focused bank Intelligent Finance (IF) declared yesterday that parent group £225m offer Halifax’s friendly £760m bid for 60% of life and pensions business St James’s Place Capital would create another 200 jobs at its Scottish operations. IF, which will not be launched until July, is to provide the e- commerce platform for a new for cream St James’s Place Private Bank. This will offer the broad range of banking products being designed by IF at the moment. Jim Spowart, chief executive of the Scottish-based IF, estimated that the establishment of the new Togetherness: Halifax chief executive James Crosby, left, with Sir Mark Weinburg, chairman of Sir James’s Place Capital, and private bank for St James’s Place would create another 200 jobs Mike Wilson, right, chief executive. Halifax plans to buy a 60% stake in St James’s Place Capital for £760m. Picture: PA of Unigate within his empire. IF had planned to launch with 1200 full-time equivalent staff in ROBERT POWELL Scotland. Spowart yesterday Business Editor revised this number to 1400. He noted that IF’s Edinburgh ROBERT Wiseman Dairies has Weir predicts strong growth Park premises, largely a customer- launched an audacious bid to buy facing call centre, could house the milk and cheese business of about 650 people. The other 750 Unigate, snatching it from the would be at its Livingston site, jaws of Dairy Crest. which would be primarily a back- If the £225m deal comes off, after profits decline to £53m office operation housing a Wiseman will more than double in “contingency call centre”. size overnight and will acquire Halifax’s proposed acquisition a strong presence in southern ANDREW WILSON of a majority stake in St James’s England and Wales, currently blank Place fits with its target of deriving areas on its distribution map. PUMP maker Weir Group is more at least half its profits from out- The enlarged Wiseman group than happy to see the back of 1999 with its traditional mortgage and would increase its share of the UK when it was hammered by the savings business by 2002. St milk market from 11% to 26%. weak oil price in the early months James’s Place would retain a But it would still be smaller than and delays in customers calling off separate stock market listing if market leader Express Dairies, orders. the deal went ahead, mainly to which controls 30%, so the deal After a profits warning in motivate a 1000-strong sales force is unlikely to raise competition December, there has been a with share options and to preserve concerns. remarkable change in the what Halifax described as its The sheer size of the proposed Full flow: chairman Robert Wiseman tightens UK market grip. company’s prospects. Chairman “unique entrepreneurial culture”. acquisition obliged Wiseman to Sir Ron Garrick forecasts that Halifax chief executive James request a suspension of its shares Wiseman’s conditional offer to Wiseman blanket coverage of 2000 will be a year of substantial Crosby emphasised that the acquis- on the London Stock Exchange Unigate will probably be firmed London and southern England growth. ition brought with it St James’s yesterday. Wiseman shares have up next week following due without creating any overlap with The market warmed to the story Place’s 350,000 high net worth halved in value, to 83.5p, since a dilligence and consultation with its existing activities. clients. The former building society’s profits warning in December, key shareholders. Unigate owns two super-dairies traditional business was focused slashing the company’s market Dairy Crest was outraged by on the outskirts of London. FA C T FILE on lower and middle-income capitalisation to just £71m. Wiseman’s intrusion, and insisted It also has milk processing plants Final 1999 1998 customers. Unigate agreed on February 18 that Unigate respect its “binding at Kidlington in Oxfordshire, Pre-tax profit £53.3m £64.0m Halifax said industry estimates to merge its milk and cheese agreement” to hand over its milk Totnes, in Devon, Thornbury, near Turnover £755m £725m suggested 3.1 million people in business with Dairy Crest in a and cheese business in return for a Bristol, and Newport, in South Dividend 10.4p 9.9p the UK had net assets of £200,000 shares and debt deal worth £220m 40% equity stake in Dairy Crest. Wales. E P S 19.6p 23.2p or more, while the number of tax- at the time. However, Dairy Crest However, City analysts welcomed A spokesman for Wiseman Pump up the volume: Sir Ron Garrick, left, chairman and Duncan Whyte, chief executive. payers earning in excess of shares have fallen 16% since then, Wiseman’s bold initiative, saying stressed the “excellent geographic £100,000-a-year was expected to knocking nearly £20m off the further consolidation in the milk fit” that Uingate would represent, and Weir shares firmed 9.5p to acquisition. The Australian manu- and the First Engineering rail itself while Tyco is in the middle of grow by 10% per annum for the headline value. processing industry was inevitable. and pointed out that it would add 188.5p. That compares with the facturer of slurry pumps for the maintenance associate is near the a major acquisition in the US next five years. Wiseman saw an opportunity Ian Macarthur at Bell, Lawrie, Waitrose and Somerfield to 300p cash offer from Flowserve of minerals and mining industries top of his list. which is resulting in the closure of Crosby said: “We are gaining and approached Unigate last week White in Glasgow, said: “It is a bit Wiseman’s list of supermarket the US last February and a 156p contributed £3.5m and is set to The 22.5%-owned investment 13 factories. increased exposure to a fast- with a proposal to buy its milk and of a quantum leap for the company, customers. low when the firm was at the nadir make a significant impact in the brought in £1.5m less, reflecting He reckons Weir should be able growing market with the client cheese business for £125m in cash but I think it is to be applauded”. Unigate also has four cheese- of its stock price fortunes. current year. new, less profitable, Railtrack to take advantage of at least one of model of the future – face-to-face and £100m in assumed debt. Wiseman controls more than making plants, in Chard, in Som- Pre-tax profits in 1999 fell a However, that is at £8.3m of contracts which do not have the these situations to extend either its advice supported by the new Both sides revealed yesterday 70% of the Scottish milk market erset, Carmarthen, in South sixth to £53.3m before exceptional reorganisation costs in bringing the “dowry” element in the initial pumps or valves activities. technologies.” that they were in negotiations. and is at the centre of a Compet- Wales, Wexford, in Southern Ire- items and goodwill write off. two businesses together. Their agreements. Market estimates Although in many countries the The St James’s Place deal should Wiseman, which is based in East ition Commission investigation land, and County Fermanagh, in The setback was due substant- union will lead to annualised value First Engineering at about new year got off to a slow start, help IF get off the ground, provid- Kilbride, said it was proposing to into milk trading in Scotland. the North. ially to the weakness of the oil savings of £8m from the beginning £130m. there have been strong perform- ing a ready-made and wealthy pay £225m in cash for Unigate’s It also has a major presence in But it is unclear whether Wise- price which depleted demand for of next year. Sir Ron said that Weir could ances in both the Americas and potential customer base for its milk and cheese business and northern England, thanks to its man would wish to retain these for equipment from the oil industry, As part of the integration, make an acquisition of up to £200m the Middle East and currently the banking products. Crosby has also would fund the deal entirely super-dairy in Manchester. The long since Unigate is retaining which normally accounts for up to production has been transferred and possibly accelerate its asset order book is at a £690m record. highlighted ambitions to derive through bank borrowings. company is advancing into the control of all its dairy brands. 30% of the group’s business in from Ipswich to Glasgow. sales to help fund such a move. He Judith MacKenzie at Bell about half of IF’s business through Wiseman’s debt/equity ratio Midlands with the construction of These include St Ivel soft cheese buoyant times. The focus of City interest in is distressed by the current share Lawrie White says that Weir is a independent financial advisers. would shoot up to 300% as milk processing plant at and Country Life butter. In addition, there were deferrals Weir is the strategy adopted by rating as he cannot use Weir paper good long term growth story. IF’s customers will be able to a result, but a spokesman said Droitwich, near Birmingham. Unigate has taken a strategic of work in the Indo Pacific area in chief executive Duncan Whyte to make acquisitions. Market expectations are for cur- transact through a conventional interest cover would remain The acqusition of Unigate’s decision to pull out of milk in power generation. who joined from ScottishPower He argued that Weir is in a much rent year profits of around £68m telephone banking service, as well “comfortable” and the increased milk business, which generates order to focus on processed meats, However, a saving grace was a last June. stronger position than many of its with the second half showing by as the Internet. IF will offer cur- gearing level would be in line with profits of more than £50m a year convenience foods and its four-month contribution from the He has decided that Weir could competitors including Sulzer, far the better performance. rent accounts, savings, mortgages, that of Express Dairies. on sales of £750m, would give Wincanton logistics operation. £190m Warman International profitably shed non-core activities Germany’s KSB and Flowserve Comment Page 21 personal loans, and credit cards. Halifax shares added 8p to 685p yesterday. Tom Rayner, banking analyst at SG Securities in London, said St M&S sells Gyle Microsoft blow over Edinburgh Fund Managers James’s Place “slots in quite well”. He was encouraged Halifax now had “a strategy in mind which they are actually pursuing”, Centre for £187m Telewest stake plan see 21% rise to £8bn in year noting people had thought previ- ously that it was “drifting”. LYNNE ROBERTSON SIMON WATKINS IAN MCCONNELL Halifax has also signed up Direct Line architect Peter Wood THE Gyle Centre in Edinburgh chain, however, won the race to EUROPEAN watchdogs as giving the two US groups EDINBURGH Fund Managers lighted its improving investment be out of the woods yet, its relative to set up an online motor and was in the hands of new owners buy the award-winning centre in a yesterday launched an “joint control” of Telewest. (Edinburgh) yesterday reported its performance and noted it had dou- performance has improved. household insurance business. yesterday after Marks & Spencer joint £122m deal with Safeway, investigation into Microsoft’s Microsoft and Liberty gave funds total had risen 21% to £8bn bled the number of distribution The investment house was Spowart and Crosby will join sold off the showpiece shopping the Gyle’s other main tenant, plans to take a stake in cable undertakings to the in the year to January 31, assisted partnerships it has with other plagued by poor investment per- the St James’s Place board. Halifax mall to a pension fund in a £187m which purchased 1% of the site. TV company Telewest, amid commission on March 1 not to by a 115% rise in new business to financial institutions during the formance in the immediate after- chairman Lord Stevenson retains deal. M&S said the sale was part of a fears the deal could stifle interfere in Telewest’s choice of about £410m. year to end-January. It now has math of its acquisition of Dunedin his seat. The sale, one of the biggest of joint deal, also involving the sale competition in digital set-top box software, and to Chief executive Iain Watt said nine. Fund Managers four years ago, St James’s Place founders Sir its kind in Scotland, puts owner- of prime property in Newcastle, technology. ensure that interactive funds had increased to £8.5bn or But it held its total dividend at and this held it back significantly. Mark Weinberg and Mike Wilson, ship of the Gyle into the pension which has raised £220m. The European Commission programme-makers are able to £8.6bn since the financial year- 25p – with a final payout of 17p. Edinburgh’s shares were respectively chairman and chief fund which M&S pipped to the Roger Aldridge, M&S executive investigation will centre on make products which would end. This upward movement in Watt expressed hopes of getting unchanged at 663.5p yesterday – executive, will keep their posts. post in the race to purchase the director of property, said: “The Microsoft’s software for digital work on Microsoft’s system. funds will have resulted largely the dividend back on an upward slightly below the 675p level at Halifax has underpinned its property when it was first sales have given us a significant set-top boxes. But the commission said the from rising stock markets – which tack within two years. which shares were placed to fund 300p-a-share offer for a maximum auctioned in 1997. return on our investments, and In a statement, the undertakings could not remove also played a big part in the 21% Chairman Colin Ross, who is the Dunedin purchase. of 60% of St James’s Place by Liverpool-based University have released significant capital commission said it was the “serious doubts” it had. advance. 60, announced he would retire They have recovered dramati- acquiring conditionally 60% of Superannuation Scheme, the UK’s for strategic developments in our concerned that Microsoft’s Telewest, which has Watt added that new business after the company’s 2001 annual cally from the 188.5p low they hit financial services giant Prudent- third largest pension fund, was the core businesses.” software gained unfair committed itself to using during the first two months of the meeting. Watt said the matter of in October 1998. ial’s 15.8% stake in the business. preferred bidder when the out-of- He indicated the chain would advantage through the set-top box software from new accounting period was 40% Ross’s successor had not yet been Including compensation for lost Prudential has pledged to accept town shopping centre was put on continue to operate from its company’s stake in Telewest, Microsoft’s rival, Sun higher than in the same two discussed. investment trust mandates, Edin- the offer in respect of the rest of its the market by owners Edinburgh 110,000 sq ft store within the the UK’s second biggest cable Microsystems, said it believed months last year. Edinburgh said more than three- burgh’s total pre-tax profits edged holding. City Council. The High Street Gyle. operator. the investigation would prove Pre-tax profits, excluding com- quarters of all its funds out-per- up from £11.7m to £12.1m. Shares in St James’s Place Welcoming the deal, Ford “The focus area will be the concerns were unfounded. pensation for loss of investment formed their benchmarks in 1999. Edinburgh would not compete jumped 22p to 252p yesterday, as Swanson, investment partner with provision of software for digital As well as a stake in trust business, rose from £9.69m The fund manager’s flagship for the mandates to run Gartmore it reported an 8% rise in 1999 property specialists Ryden, said: set-top boxes in the UK, and its Telewest, Microsoft has a 5% to £10.8m. This included much- Edinburgh Investment Trust, with Scotland’s investment trusts. pre-tax profits to £93.2m. “It is probably the biggest thing impact for the choice of British stake in NTL. NTL is set to improved gains on the disposal of total assets of about £1.8bn, had Watt said he did not consider St James’s Place’s J Rothschild that has happened in Scotland cable subscribers,” the become the biggest cable investments of £528m, compared been considered by industry Edinburgh a takeover target, Partnership marketing arm will since the last time the Gyle was commission said. company in the UK by taking with only £45m in the prior year. observers to be in grave danger of despite rapid consolidation in the be renamed the St James’s Place sold. I think it is a good move for Microsoft is set to take a over Cable & Wireless The investment house high- attack. However, while it may not sector. Partnership. the Gyle. USS are well respected 29.9% stake in Telewest as Communications’ residential and will have more interest in the part of a complex deal with cable business in a deal centre in terms of tenant relations US telecoms group AT&T, announced last year. That deal than M&S. USS have got their announced last year. will see Microsoft’s stake work cut out, but will make much Telewest’s other major reduced to 3%. better commercial landlords.” shareholder will be Liberty Stephen Byers, Secretary of Property analysts forecast more Media, a wholly-owned State for Trade and Industry, than a year ago that the Gyle subsidiary of AT&T, which announced yesterday he was would be sold off by M&S fol- will have a 22% stake in the giving the green light to NTL’s lowing a review of the troubled UK cable company. merger with Cable & Wireless company’s property holdings. The EC described the deal Communications.