Street TalkAuthor: Edited by Tansy Harcourt...

Street Talk
Author: Edited by Tansy Harcourt ([email protected]) with James Hall and Ian Howarth
Date: 13/10/2005
Words: 7
Source: AFR
Publication: The Financial Review
Section: Market Wrap
Page: 28





Nylex hoses down acquisition rumours

A sudden and surprising rebound in the deflated share price of out-of-sorts plant hire, garden products and automotive products group Nylex in recent days has sparked all sorts of rumours about impending corporate activity.

Nylex, capped at about $260 million, has taken a while to get over the legacy of its tortured past as the former empire of serial acquirer Alan Jackson, so there is a certain irony that it should now be in the takeover sights.

Possible acquirers interested in a break-up of the group could include GUD Holdings and Hills Industries, but equally there is obviously a legion of private equity groups flush with cash. Nylex's difficulties have been compounded by its failure to dispose of its non-core automotive division, which includes a variety of rubber and plastic-based products for the car market.

But the deal to sell these assets for about $30 million (also to private equity), enabling further debt reduction from previous levels that have concerned its banks, is said to be finally imminent.

The company overall posted a $49.5 million loss in 2005, but before one-off items the core business recorded a net profit of $20.3 million. Some of the fresh interest in Nylex is due to broker talk with, coincidentally, at least three analysts producing research on the stock this week.

But Merrill Lynch lowered its operating profit forecasts this week to reflect a weaker outlook for Nylex's consumer businesses.

Merrill Lynch has a price target of 29 ?, compared to Nylex's close of 25.5 ?, while Bell Potter also released a note this week valuing it at 34 ?.

Asked about the talk of a break-up, Nylex chief executive Glen Casey told Street Talk yesterday: "Those types of ideas have been on the agenda for two to three years, ever since Austrim Nylex went into strife. There have been all types of creative solutions, and all of these options remain speculation."