Granada's proposed £2.8bn merger with Carlton Communications is likely to accelerate a number of non-core disposals.
At the top of the list is almost certain to be Granada's 50% stake in Box Clever, the TV and video rental and retail business formed in 2000 via a merger with the Thorn rental businesses owned by the Japanese bank Nomura. Analysts agree that the business is very definitely non-core to the merging ITV broadcasting business and a Granada spokesperson said that Box Clever would come under review for disposal due to the structure of its ownership but that nothing has yet been decided.
It has been repeatedly rumoured that Box Clever is being offered for sale, with a price tag of £1bn having been put on the business in a report over one year ago.
GE Capital, along with a host of private equity firms, was said to be interested in buying the business. Potential bidders are now monitoring the situation very closely, and Granada chairman Charles Allen said recently that it would consider offers if a "great" price were tabled. That said, Allen added that Granada believes it can continue to drive the performance of Box Clever and that it considers itself much like a "venture capitalist". It is not known what Nomura's plans are for the business.
Box Clever has 8,856 employees serving some two million subscribers renting three million units of equipment. The business has been split into two parts: a retail chain which operates 200 shops across the UK and is being run for cash; and a service and fulfilment business called Endeva, which is being run for growth and additional value. There are separate management teams for both businesses.
Box Clever completed a £748m securitization in June that was used to refinance an £860m merger-financing loan and a £50m working capital loan arranged by West LB and CIBC.
Another likely area for disposal initiatives will be in the Granada Learning division. It is known that private equity buyers are specifically interested in Letts Educational for which Granada paid £29m in September 1999. The Granada spokesman said that the value for Granada Learning is just under £100m. The business' domestic focus offers a clear opportunity to a private equity buyer looking to develop the brand and exit within a
relatively short timeframe. Established trade buyers would be more interested in a global brand where their
distribution strengths could be brought into play.