Tuesday, 01 December 1992

UK: Just desserts for RHM.

UK: Just desserts for RHM. - Revenge, as Toady pere was wont to say, is sweet: but revenge with a majority shareholding thrown in is positively saccharine. Consider, friends, the case of Dr John Randall, ex-mastermind of one of the UK's great postwar suc

Revenge, as Toady pere was wont to say, is sweet: but revenge with a majority shareholding thrown in is positively saccharine. Consider, friends, the case of Dr John Randall, ex-mastermind of one of the UK's great postwar success stories, Avana Foods.

Avana used to be the City's darling, and understandably so: between 1975 and 1984, the company's earnings per share (EPS) rose at an average of more than 80% per annum. Even hardened analysts were seen to brush away tears of manly joy when group year-end results were published. But then that fate that hovers eternally over Threadneedle Street decided to sport with Randall and his brainchild. Avana's EPS growth slowed down to a rate that was merely respectable, and the fickle denizens of the City began to grumble.

In 1987, mutinous shareholders decided that Randall's corporate offspring should be put up for adoption: Ranks Hovis McDougall (RHM) was chosen as the new parent, the group's name was changed to Avana Bakeries and Randall went off bitterly to start a new firm, Caines Foods. But now that same fate has turned her wheel again. Five years on, RHM is itself in trouble.

In early October, the omnivorous Hanson launched a hostile takeover bid for the group, only to be outbid by FH Tomkins. Should Tomkins' acquisition go ahead, it does not seem entirely impossible that one of the first RHM businesses to be hived off would be ... Avana Bakeries. And who is purportedly waiting in the wings should this happen? You guessed it. But John Randall is not a man to gloat over other people's difficulties.

Suggest that part of RHM's present troubles might stem from the price it paid for Avana in the first place and he will not punch the air and shout "Yo!": the most he will say, in honeyed tones, is that "the promises RHM made to its shareholders at the time of the bid have not been fulfilled. The price only seems high now because it failed to do anything with the company." Ouch.

Included in this failure is the non-building of Welsh Dragon Park, a £28-million project that would have expanded Avana's capacity and product line, but which Randall concludes "couldn't be done now".

Nonetheless, the good doctor concedes that he would "love to have a go at getting it back", and that he has "been offered the money". Watch this space to find out how he goes about it.

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