P&O’s decision to float construction business in October rather than March gets muted response.
The decision by P&O to float construction management arm Bovis ahead of schedule next month has received a lukewarm City response.

In a presentation to analysts, chief executive Luther Cochrane emphasised the strengths of the firm, but many in the City were dissatisfied with the lack of detail.

However, more information will emerge later this month when Bovis releases its prospectus. This will include details of the number of shares, an indication of the initial share price and management share incentive schemes. The company is valued at about £300m.

One analyst said: “Bovis is going to have to improve its investor relations 300% because, from an investor point of view, we have totally insufficient information.” Another said: “The figures make it look like P&O has pushed up Bovis’ profits and turnover to get ready for a sale. That throws the sustainability of its performance into question.”

Bovis’ operating profit for the half-year to 30 June 1999 rose from £9.6m to £12.3m. It expects to have £100m in cash and £50m in assets at flotation.

A third analyst was more upbeat about the company’s longer term prospects: “Bovis has got a fabulous international brand name and that has to count for something.”

Cochrane hinted that the decision to float next month instead of in March, as originally planned, had been influenced by Carillion’s success on the stock market. He said: “Carillion’s experiences indicated that the market saw it fairly favourably.”

He also said that P&O had been approached by a would-be buyer since the original announcement of the float was made in March, but added: “There has been no interest that could have derailed the whole process.”

Investor sentiment could be affected by a dispute that Bovis is involved in over the £430m Venetian Hotel in Las Vegas. Cochrane was quick to offer reassurance on this point: “There will be absolutely no financial impact on Bovis pre or post flotation. P&O will not be underwriting any liabilities on the Venetian – it does not have to.”