Jaguar on sale next month for £297m

Jaguar on sale next month for £297m
By Jonathan Davis, Financial Correspondent

Jaguar, the luxury saloon manufacturing subsidiary of BL, is to be sold to the public early next month at a price which values the business at £297m. The terms of the offer for sale, the latest step in the Government's privatization programme, were announced ,yesterday, along with profit figures showing that Jaguar continues to benefit from the strong dollar and booming sales in the United States.

Jaguar's entire share capital of 180 million shares is being sold at 165p a share, a relatively conservative price that is designed to take account of the recent weakness in the stock market and still leave some prospect for capital appreciation for. those who invest. The £297m valuation of the company compares with recent brokers' estimates that it could be valued at between £300m and £350m.

The prospectus for the issue will be published on Monday and applications for shares have to be in by Friday, August 3. Dealings in the new shares will start shortly after that. The issue has been underwritten by five different banks led by Hill 'Samuel, the issuing house, and sub-underwriting by professional City investment institutions was completed yesterday afternoon.

Jaguar's 9,500 employees, other employees of the BL group and BL's surviving minority shareholders have been given preferential rights to apply for up to 15 per cent of the shares. This is in addition to the 2.12 million shares which Jaguar is paying for itself to distribute to its employees as a profit-sharing bonus. The prospectus shows that Jaguar made an unaudited prom in the second quarter of this year of around £23m, making a total for the year so far of £41m.

The comparable figure in the first half of last year was £25m. Jaguar says that it will be paying a single dividend for this year of 4.75p, though on full- year basis it would expect to pay out 7.75p a share, which would leave the shares yielding 6.7 per cent. The shares are being sold on a multiple of 6.9 times proforma earnings in the last 12 months.

Though the flotation is an integral part of the Government's privatization programme, the proceeds will go to BL, which has said it will use the money to pay off borrowings and invest in other parts of the group.