Amstrad holders furious over Sugar buy-out offer scream the headlines on the formal offer by chairman Alan Sugar to buy the 65% of the shares he doesn’t already own for 30 pence a share but why should they be furious? Sugar makes a cogent case for the company not being worth very much, but if that is the case, why would he be putting up ?20m of his own money, thus tying up a larger proportion of his total wealth in the company if he did not believe that the thing was really worth more and that he could turn a profit on the deal? The argument is that Sugar has holders over a barrel, because if they sit tight and turn down the offer, he will feel rebuffed and his heart won’t be in running the company – but even 35% of a company that he values at ?170m ain’t hay, and to run it other than in the interests of all the shareholders would simply be cutting off his nose to spite his face. So the only reason for shareholder to feel furious is if they fear that lily-livered institutions will meekly take Sugar’s money and let the company go. The fear that fund managers will be lily-livered is well founded – they meekly accepted Sir Andrew Lloyd Webber’s parsimonious offer for his Really Useful Group Plc only to watch helplessly as he went on to sell a 30% stake to Polygram NV at a significantly higher price as soon as he had taken it private, and holders in Richard Branson’s Virgin Group Plc would have done much better if they had sat on their hands when he called for approval to buy back the group – the deals with Thorn EMI Plc and W H Smith & Sons Plc soon left the price at which he bought back far behind. Amstrad shareholders should tell Alan Sugar where he can stick his money and demand that he get in some non-executive directors and get on with running the company in the best interests of all shareholders.
