Rank unloads £620m worth of shares in Xerox


The reduction in Rank’s holding in Rank Xerox, the fifth time since 1964 that it has raised cash from selling rights or other interests in the profitable joint venture, will cut its stake from 49 per cent to 30 per cent. The shares are being sold to its partner, the American Xerox Corporation, for cash.

Rank has no plans to sell its remaining stake in the photocopier group, according to Michael Gifford, chief executive.

The proceeds will be invested in gaming, bingo and its Oasis holiday villages venture. Mr Gifford confirmed that he was interested in the MGM cinema chain, which is currently owned by the French bank Credit Lyonnais.

The bank has announced its intention to sell and Warburg, the merchant bank handling the sale, is expected to release particulars soon.

MGM is the largest cinema chain in the UK and Odeon, owned by Rank, is the second-largest, so there would be clear monopoly implications to any purchase. Mr Gifford said, however, that Rank would have to be “an interested party” when the sales particulars were issued.

The price achieved by Rank for its Xerox stake disappointed the City and the shares fell 22p to 381p. It represented a gain of £325m over book value.

In a related transaction, Rank is making a £55m offer to buy the outstanding minority shares in A Kershaw & Sons, a quoted company that owns interests in Rank Xerox. Rank owns 85 per cent of Kershaw. If the offer is accepted Rank will be left with 29.4 per cent of voting rights in Rank Xerox and 20 per cent of the participating profits – profits before research and development costs and before Xerox head office costs.

Rank also announced pre-tax profits for the year to 31 October before Rank Xerox restructuring costs of £376.6m, a rise of 37 per cent. The total dividend was 13.25p, an increase of 9 per cent.

The company said the leisure and entertainment markets in the US and UK were beginning to emerge from recession. Leisure spending increased, although some areas did better than others. Rank sold 3.5 million holidays last year, a 3 per cent increase in volume with an average tariff also up by 3 per cent. Bookings for the first half of this year are up 10 per cent by volume and 14 per cent by value, although those for the second half are slightly lower.

Film and television did well. The latest Disney film, The Lion King, boosted cinema revenues towards the end of the year and into this year.

Rank Xerox had an excellent year, with turnover increasing by 5 per cent and the participation profit before restructuring costs up by 41 per cent. After Rank’s share of the £62m restructuring costs the contribution was almost unchanged at £151.5m. Fuji Xerox, including royalties, boosted its contribution by 20 per cent aided by the strong yen.

Rank joined Haloid of the US to form Rank Xerox in 1956 and has invested up to £25m in the venture. It became one of the most profitable companies in the UK until patents over plainpaper copier technology expired in the 1970s. It rapidly lost market share to new competitors, notably the Japanese.

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