Market report
CUSTOS
The terms of the Monsanto USA bid for the minority holdings in one of its British sub- sidiaries, Monsanto Chemicals, are of wide interest. The consideration is a sterling loan stock convertible into the common stock (ordinary shares) of the American parent be- tween 1972 and 1982. The result, therefore, is that an American company is taking over British assets not for cash. as has always been the case hitherto, but for shares. Thus the local minority retains its interest in the group (and avoids the need to pay capital gains tax until ultimate realisation) and the American com- pany avoids the need to export funds in face of restrictions at home or to borrow them locally in the face of sky-high interest rates. It is difficult to imagine that this method will not Valuations at 25 March /969
First portfolio 1'6,677 (details next week) Second portfolio 600 Pillar Holdings at 18s 10Id .. £566 15 Kaiser Steel at £36 8s .. £546 250 Lonrho at Ms
£800 100 British Petroleum at 140s 9d .. £704 300 Vosper at 21s 6d .. £323 1,000 Allied Breweries at 20s 7-14 .. £1.031 300 J. Bibby at 33s 6d .. • • .. £502 Cash in hand .. • • . . £1,459
£5.931
Deduct: expenses
£173 Total £5,758
be copied many times, though Bank of Eng- land permission is needed—and may not always be granted unless the American bidder already has a sizeable operation here.
In this case the loan stock element carries a 5 per cent coupon. On conversion the dollar premium would be payable but only at a rate appropriate to the price of the Monsanto com- mon stock now rather than when conversion actually takes place, which may mean that the effective dollar premium on conversion will be well below the market rate. The only pity is that Monsanto USA is not a particularly excit- ing stock, rather a good, steady blue chip selling in New York at fifteen times earnings.
The equity market has been a little better this week—for no particular reason except that the idea is getting round that the Budget will not be so tough after all. On Tuesday the Financial Times ordinary share index registered its best gain for six months, rising over eight points to over the 476 mark.
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