Europe South Asia Asia Pacific Americas Middle East Africa BBC Homepage World Service Education



Front Page

World

UK

UK Politics

Business

Sci/Tech

Health

Education

Sport

Entertainment

Talking Point
On Air
Feedback
Low Graphics
Help

Friday, November 6, 1998 Published at 21:30 GMT


Business: The Company File

LucasVarity's future hangs in the balance

LucasVarity has been the mainstay of the engineering industry

The result of a vote by shareholders in LucasVarity on a controversial attempt to move the automotive parts company's stock market market listing from London to New York has been delayed after protests from opponents of the initiative.


Hailey Miller reports on the LucasVarity plan
The outcome, which is too close to call, will not now be released until noon on Saturday.

"It's shaping up to be a very close vote indeed," said a spokesman for the group as counting continued.

In a stormy meeting to decide the company's fate shareholders accused the LucasVarity board of "manipulation and greed" amid claims that the decision to go to the US is based on the bigger pay packets executives can expect to receive over there.

The UK engineering firm, which merged with US-based Varity in 1996, says the move will make it easier for the company to raise capital.

But UK shareholders are sceptical of the value of shifting its listing, and individual shareholders are worried that they might lose UK tax privileges if the shares are listed in New York.

Tough hurdle

The company faces a double hurdle if it is to win shareholder approval for the move at its Extraordinary General Meeting.

First 75% of all shares must be voted in favour. Although half the shares are now owned by US investors, some of the big UK institutional shareholders, including Norwich Union and Legal and General, plan to vote against the move.

Secondly, the company needs to win an outright majority of 50% of those who vote, despite the size of their shareholding. This could give the 18,000 individual investors the power to block the deal.

Gordon Hoar, who retired in 1992 after 30 years at Lucas Aerospace, said, "I'm going to vote against because I don't approve of the whole set up, including the board of directors.

It's a typical example of the tail wagging the dog. Lucas paid good money for Varity and we would have expected it to remain a British company."

Sir Anthony Gill, former chief executive at Lucas which was folded into the enlarged group, said: "We were told it would continue as a British company which would remain in Britain."

Derek Shelton-Smith, who retired in 1989 after 25 years with Lucas Aerospace, said on his way into the meeting, "It's effectively a cheap take over allowed by a weak board."

Old UK company


[ image: Workers are worried that jobs will be less secure]
Workers are worried that jobs will be less secure
Lucas is one of the oldest names in the UK engineering industry, with a 100 year old history and 24,000 employees in Britain. As well as brakes and other automotive parts, it also produces components for the aircraft industry.

It is one of the City's top companies, listed in the FTSE 100 index, and its departure from the London stockmarket would mean institutions having to rebalance their portfolios.

Victor Rice, chief executive of LucasVarity, says the plan would put the company on equal footing with its American rivals, and enable the company to underwrite a big share buy-back to boost its value.

But Mr Rice's job could be in jeopardy if LucasVarity loses the vote.



Advanced options | Search tips




Back to top | BBC News Home | BBC Homepage |


The Company File Contents

Internet Links


LucasVarity


The BBC is not responsible for the content of external internet sites.




In this section

Microsoft trial mediator welcomed

Vodafone takeover battle heats up

Christmas turkey strike vote

NatWest bid timetable frozen

France faces EU action over electricity

Pace enters US cable heartland

Mannesmann fights back

Storehouse splits up Mothercare and Bhs

The rapid rise of Vodafone

The hidden shopping bills

Europe's top net stock

Safeway faces cash demand probe

Mitchell intervenes to help shipyard

New factory creates 500 jobs

Drugs company announces 300 jobs

BT speeds internet access

ICL creates 1,000 UK jobs

National Power splits in two

NTT to slash workforce

Scoot links up with Vivendi

New freedom for Post Office

Insolvent firms to get breathing space

Airtours profits jump 12%

Freeserve shares surge

LVMH buys UK auction house

Rover - a car firm's troubles