Word: stocking
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Dates: during 2000-2000
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After 12 years as a public company, business-travel agency Hogg Robinson recently booked a novel trip for itself: a one-way flight out of the London Stock Exchange. CEO David Radcliffe led a $450 million management buyout of the firm, a move he saw as the best solution to an increasingly common dilemma. Though Hogg Robinson was profitable--it had revenues of $2.63 billion last year--its share price had slumped because investors considered the company too small to offer "exciting double-digit growth," as Radcliffe explains. With a depressed stock price, the company found it hard to grow...
Hogg Robinson's decision is part of a surprising trend at a time when start-up companies still dream of going public. Even so, a growing number of European firms--mostly from old-economy sectors--are delisting from stock exchanges. Freed from having to please investors every quarter, many smaller companies find it easier to grow--or reinvent themselves--when they are financed by private-equity funds and banks instead. The buyout firm Kohlberg Kravis Robert recently created a $3 billion European fund and started scouting the Old World for new privatization deals. "There are lots of opportunities here," explains...
...economy that is driving many firms out of the stock market. As investors, especially institutional investors, focus on big-growth, high-tech stocks, smaller, nontech companies don't show up on the radar, even if they are profitable and growing steadily. Martin Bolland, a partner at Alchemy Partners, a London private-equity investment firm, says that because smaller companies are hard to track, "they are an inefficient way of investing" for fund managers. Of the companies that have gone private, more than 90% are in traditional industries such as paper, textiles, food and water, reckons the University of Nottingham...
...usually easy to sell the revamped companies to bigger competitors. "It's really all about consolidation," he says. And consolidation is good, claim today's buyout barons. They see themselves not as corporate raiders stalking bloated conglomerates but as value hunters salvaging sound companies unloved by today's stock markets...
...last March when he used his 10-month-old start-up, Pacific Century CyberWorks, to acquire the territory's dominant telecommunications company, Cable & Wireless HKT. The $35.9 billion merger was the largest in Asia outside Japan. Analysts fell over one another to issue buy recommendations on CyberWorks' stock, which they predicted would soar into the stratosphere. Whoops! Put a hold on that order. Six months later, analysts say the new firm's strategy of linking broadband Internet services to an Old World telco is no longer so compelling--and Li is losing altitude fast...