ayforth Take-over Scheme
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istol and ECW NO SPENDING SPREE
By ALAN HAVARD, M Inst T the Leyland-AEC merger deal).
Leyland has an option to extend its interest in Bristol and ECW on agreed terms, but not so as to gain control; Leyland will retain a majority interest in Park Royal and THC a majority interest in its two companies.
The THC statement emphasizes that this deal will free Bristol and ECW from the statutory restriction which has limited them since nationalization to supplying things for their own use or the use of THC subsidiaries or other State transport boards. This new freedom will "enable them to exploit their full potential and lead to a fruitful expansion of their production". Not long ago, the THC manufacturing companies were grouped under Maj.-Gen. G. N. Russell, chairman of Bristol and ECW. Last year Bristol (which lost money in 1963) turned in a profit after a thorough re-organization.
The THC statement says that Leyland will benefit from additional capacity to meet the ever-increasing demands of very full order books, while Bristol and ECW will have the use of Leyland marketing, service, research, purchasing and technical training facilities.
In 1964 Bristol produced 757 chassis and 30 trailers, and ECW built 684 bodies.
TRANSPORTERS LINK
THIRD big announcement on Tuesday
was the news that British Road Services Ltd. and Western Motor Holdings Ltd. had arranged to co-ordinate their collection, storage artd delivery of motor vehicles and had acquired a 43-acre storage site at Wythalt, near Birmingham.
Western Motor Holdings will transfer to BRS a 49 per cent interest in Autocar and Transporters Ltd. and in B. J. Henry Ltd. (both wholly owned by Distributor Deliveries Ltd., itself 83 per cent owned by Western) in exchange for a 49 per cent interest in Furness and Parker Ltd. and a cash payment. (Furness and Parker is owned by 13RS.) The Autocar, Henry and -Furness businesses will continue to operate separately under their present managements. WHEN announcements of the importance of those made this week by the Transport Holding Company become known the immediate, inevitable, question is " Why? " Since THC is also State-owned there tends to be an inherent suspicion.
The question itself can be ansWered easily. The THC regards itself in every sense as a fully-competitive commercial concern and, as such, is always seeking new ways to turn an honest penny. They are not buying just for the sake of it.
There arc, as it happens, one or two more purchases "in the pipeline" at various stages of negotiation, at least one of which could be sizeable. But there is no intention to begin a haulage buying spree.
The setting-up of a holding company for financial control of the Tayforth Group is merely an administrative device which happens to suit the circumstances. Negotiations with Tayforth began seriously about six or seven months ago, at the initiative of the THC. There is one obvious reason for their initiative—BRS is, comparatively, at a numerical disadvantage in Scotland. The second, equally obvious, reason is that all the indications are that the take-over will be profitable to everyone. THC capital can be used to finance the purchase but it would not be possible to tie up that amount of capital long-term, so they will seek finance either from the Government or from the open market.
Although there is no reason to fear redundancies among the Tayforth Group companies, fairly close working can be expected between them and BRS at the general operating level; rather along the sort of lines that exist at present. Will they seek a joint rates structure? I would expect the THC attitude to be the commonsense one of leaving existing structures well alone unless an improvement can be seen.
I would expect future THC acquisitions to be judicious rather than extensive, dePendiniz to some extent on how much capital is made available (there being no settled policy yet). Within their declared endeavour to be as commercial as possible, it could be that their minds will turn to specialized activities.
Evidence of this is the announcement about Western Motor Holdings, whose main traffic is for the motorcar manufacturers. Certainly the initiative in this instance came from the State concern.
There was no Ministry of Transport pressure about the haulage purchases; nor was there about the Leyland tie-up. Whether you regard this or the Tayforth news as more important depends upon your own point of view. The initiative here may have come initially from Leyland, with a certain encouragement from THC.
There is an equally obvious reason here. THC has always felt (and made no bones about it) that the State vehicle and body manufacturing concerns. would do better on the open market. Production is rather unrealistically geared to the somewhat limited demands of the Tilling bus group and BRS, The Minister last January freed them from Elio limits on production imposed by the 1962 Transport Act, hut Section 29 (7) still prohibited any wholly owned THC subsidiary from engaging in the open market.
When in Opposition in the House of Commons Mr. Anthony Wedgwood Berm saw this loophole and tried to get THC to sell shares in the manufacturing undertakings, without success. This, however, is exactly the reason for the Leyland share-exchange agreement. With Bristol and ECW no longer wholly owned, they can 'take full advantage of the considerable Leyland group sales and technological facilities. Far from redundancies. the move should provide new horizons for the State concerns.
The particular relevance here is on the bus side, where the Tilling Group is virtually all-Brisiol. lhcsc companies will now be free to buy whatever buses they please. Political comment is on page 25