Urenco might best be privatised through an IPO

 
David Hellier
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WITH the transactional markets still deathly quiet, it’s tempting to think of investment bankers sitting around twiddling their thumbs or frequenting their gyms rather more than usual.

But there’s still plenty of speculative work going on, and some less speculative work, as well as the odd IPO being planned, such as that of Polymetal I wrote about last week.

One of the more interesting projects being looked at is the possible privatisation of Urenco, a world leader in concentrating uranium, which is currently owned by the UK government, the Dutch government and German utilities E.ON and RWE.

Last month, RWE and E.ON appointed Bank of America Merrill Lynch to conduct a strategic review of their joint stake and since then, there have been many meetings to discuss the options.

Urenco’s order book stretches beyond 2025, giving it very reliable earnings. It would be tempting to sell the company to the highest bidder in a sealed bid contest, but this would be unlikely to happen because of the strategic importance of the company.

Bankers think the process would be better managed if they sold shares in the company in an IPO, where they would have more control over those who bought in (at least in the initial allocation).

But Fukushima is still fresh in the mind and the IPO markets need to thaw first, before Urenco can make best use of them.

THE CADBURY RULES
Deutsche Bank advisers led by Richard Sheppard will be preparing documents in connection with their client Colfax’s takeover of the UK group Charter.

Colfax beat off a competing bid from Melrose and is now in a position to fulfil rule number 24.2 of the City’s Takeover Code, which compels it to set out its intentions for the company it has just bought, in terms of which employees it wants to get rid of, which businesses and which factories and so on.

Both Kraft and Lazard, its adviser, ran into trouble with the Panel during last year’s bid for Cadbury, when it turned out that a factory they said was going to be kept open was closed.

As a consequence of this affair and the later thoughts of Cadbury chairman Sir Roger Carr, who is now CBI president, the disclosure rules have been enhanced and now Colfax needs to state clearly its intentions for Charter and its employees for a full 12 month period from the time the deal closes.

“We will adhere closely to the Panel requirements,” said a source close to Colfax. It’s unlikely that the firm will want to follow Kraft in upsetting the Panel and ending up in front of a Select Committee.
david.hellier@cityam.com