Dalgety break-up speculation rages

12 August 1997

Dalgety break-up speculation rages

SPECULATION continues that Dalgety will sell part of its business as the company issues its second profit warning for the year and shares hit a five year low.

As many as six merchant banks are said to have prepared break-up plans for the agricultural conglomerate. But Dalgety directors deny they have held any discussions with ING Barings or any other merchant bank or company.

The markets battering of the Dalgety share price over the past couple of years has been primarily due to the groups flagging pet-food division, which has suffered throughout the BSE crisis – expected to cost the company about £11m this year in exceptionals.

Buyers reportedly interested in Dalgety include Associated British Foods, Heinz, Nestlé of Switzerland and Ralston Purina of the US. Analysts believe the break-up could fetch as much as 330p a share, a significant premium compared to yesterdays closing price when Dalgety moved up 15p to 255.5p.

But the news may not appease investors, who have seen their investment fall by 65% over the past five years, with the company hitting a five-year low of 222.5p earlier this year.

Dalgety has a number of businesses, including animal feeds, fertilisers, speciality ingredients such as its milling operations and a pig-breeding subsidiary. The Dalgety board will release results later this month of its strategic review of whether to sell parts of its business.