Business Watch: Today’s the day the Bears have a picnic

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Sunny and share?
D-Day is nigh for Carphone Warehouse and its shareholders.
Today (March 29), shares in the mobile retail chain will trade as a separate entity, as will Carphone’s demerged internet and phone business Talk Talk.

It’s taken more than a year for the split to come to fruition, thanks largely to the global financial crisis, which put Carphone’s plans on hold.
But now the shareholders – thousands of whom are Carphone or Talk Talk employees – will learn whether it was really worth all the fuss, waiting, extraordinary meetings and court hearings.

The demerger is intended to make their shares worth more by unlocking what founder Charles Dunstone and many analysts believe is the hidden value in each business that has been lost on the stockmarket, which has placed a conglomerate-style discount on the shares.

As of Tuesday this week the original Carphone shares traded for the last time. Shares in the new, trimmed-down Carphone Warehouse and shares in the newly-listed Talk Talk will begin trading separately for the first time on Monday morning, assuming it all goes to plan.

Dunstone will be hoping that it’s a good day for the market as a whole, which would help both sets of shares get off to a strong start.

Prospects for the Carphone business – joint owner of Europe’s largest mobile phone retailer – are certainly looking a bit sweeter after Enders Analysis estimated that European mobile revenue growth improved in the fourth quarter for the first time since 2008, “as improving economic fundamentals finally started to feed through”.

That said the prospects of the demerger have already given shares in the combined business a significant boost in the past 12 months.
Original Carphone shares closed, for the last time, at 190.5p, up from just 120p a year ago – valuing the whole business at £1.74 billion.

Now Dunstone has to perform and encore, and not just on Day One, but over the next few years, to prove whether the demerger was indeed the right decision.

Full article in Mobile News issue 460 (March 29, 2010).

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