Lord Ashcroft, the Conservative party deputy chairman and major donor, has agreed to sell his loss-making US janitorial business in a deal that will bring him a Â£132m windfall.
The proposed sale of OneSource to ABM Industries shocked UK investors yesterday because it values the company, which is 74% controlled by Lord Ashcroft, at Â£179m. That is more than seven times its stock market value on the Aim junior stock market in London.
OneSource, which carries out duties from litter removal to toilet cleaning for more than 10,000 US customers, was created by Lord Ashcroft after he acquired the US arm of a Danish cleaning firm, ISS, for just $1 ten years ago.
Henrik Slipsager, chief executive of ABM, said: "Although OneSource is a public company traded on Aim, it has a very limited public float. Its chairman Lord Ashcroft has an interest in 74%, so we didn't see the market traded value of the shares as representative of OneSource's inherent value - either as a standalone company or as part of a combination with ABM."
OneSource made a $1.9m (Â£930,000) loss for the year to March 31 and has been struggling to break even in the face of thin margins and union resistance to Lord Ashcroft's attempts to cut labour costs.
The business is now close to resolving years of worker compensation claims but it was hit this year by a $4.1m charge after unions forced it to recognise obligations to pension plans it had sought to exit. The issue remains in dispute.
The Â£48.10-a-share offer from ABM is 46 times the firm's earnings before interest, tax, depreciation and amortisation - a ratio almost unheard of in the City.
Mr Slipsager insisted the price was justified because of the "unique" opportunities for cost-cutting presented by the enlarged group. He expects to cut duplicated back office jobs and to generate annual cost savings for the combined group of between $45m and $50m.
ABM is also well placed to take advantage of OneSource tax losses which could wipe $14m from the enlarged group's tax bill.
The sale of OneSource is the latest of a string of staggering feats of financial alchemy which have punctuated Belize-based Lord Ashcroft's business career and have left the British tax exile with a complex web of business interests worth an estimated Â£800m.
Other lucrative deals include timely purchases of share options at burglar alarm group ADT before the business was sold to US conglomerate Tyco for $6bn. His fortune took a dent, however, when Tyco was hit by a corporate corruption scandal involving the then chief executive Dennis Kozlowski.
Lord Ashcroft, who has been a regular donor to the Tory party, was appointed deputy party chairman by David Cameron in 2005. In 1999 he had twice been turned down for a peerage by the political honours scrutiny committee, despite being nominated by William Hague. After his eventual ennoblement, he successfully fought a court action to have "disobliging references" in government files on him ruled to be "without foundation".
OneSource has not been a listed company for long, having been demerged last year from another of Lord Ashcroft's London-listed vehicles, BB Holdings, which contains his interest in Belize Bank. A third listed business, Carlisle Group, contains Lord Ashcroft's UK cleaning and recruitment interests. All three are tightly held by the British peer and form the most visible part of his labyrinthine business empire, much of which is incorporated in offshore tax havens.
- 104 Globalization
- 185 Corruption
- 201 Executive Compensation