Waterford to consider sale of US firm after interest shown

Waterford Wedgwood could raise in the region of $210 million (€166 million) through the sale of its US subsidiary, All-Clad, commentators believe.

News of a possible disposal came yesterday when Waterford said it had received "significant, unsolicited third-party interest" in All-Clad.

"The nature of the interest expressed is such that the board will carefully consider the company's best interests with regard thereto," Waterford said in a trading update.

Analysts say a price of $200-$210 million for All-Clad would make a sale attractive for Waterford.

The US firm, which manufactures high-grade cookware, has been in the Waterford stable since 1999, when it was purchased for $110 million.

The company could halve its debt with the proceeds, which, at the $210 million level, would be close to the market capitalisation of the overall Waterford group.

Waterford yesterday reported worldwide sales of €241.9 million for the three months ending on December 31st, a result which was flat on the previous year on a like-for-like basis.

It said Christmas sales were "satisfactory" despite the heavy discounting implemented over the rest of the industry.

Operating margins rose to 7.7 on the back of the firm's reduced cost base.

Analysts last night pulled back their forecasts to reflect what they saw as slightly disappointing sales and debt figures.

They welcomed Waterford's efforts to hedge its future currency exposure however, with a cap at $1.25 now in place for 2005.

Waterford made some progress on debt reduction over the quarter, but analysts remain concerned about what one described as an "uncomfortable" debt burden of $400 million.

Group chief executive Mr Redmond O'Donoghue acknowledged that reduction in interest payments that would flow from an All-Clad sale would allow the firm to place more "oxygen" behind its other brands.

He said the company would also consider All-Clad's location within a "high-tax" jurisdiction when looking at a disposal.

However, an All-Clad sale would create a hole in group profits. The firm accounts for some 12 per cent of group sales and about 30 per cent of its profits.

Mr O'Donoghue said the company's period of restructuring, which has seen 3,000 workers leave the group, was now complete, with the firm much more focused on marketing and branding. He signalled "better prospects for the year to come".

Mr O'Donoghue declined to comment on Monday's purchase of 3.3 per cent of Royal Doulton by Waterford directors Sir Anthony O'Reilly and Mr Peter Goulandris.

He said the transaction was a personal matter for the two businessmen, adding that Waterford's stance on its 21 per cent holding in Royal Doulton was unchanged.

Shares in Waterford closed unchanged at 25 cents last night.