More on GUS
GUS: demerger
GUS has confirmed that it plans a demerger, splitting Argos Retail Group (Argos and Homebase) from Experian (the credit rating and information business).
The demerged Experian business will issue new shares (equal to 10%-15% of the number of existing shares). This is not unreasonable as it will carry a significant part of GUS’s debt: Experian is cyclical and should not be too geared.
There are no real details other than that. This is mildly positive as we there is no real logic in keeping the two businesses together. However, as it was expected it is unlikely to have much effect on the value.
At 1105p GUS is trading on a prospective PE of 17× with a 2.8% yield. It looks expensive against retailers given that Argos’s recent performance has not been as strong as in the past. Experian is a fast growing business, but it is cyclical so it is no bargain at this price. Quality, but reflected in the price.
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