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Company spotlight: Montpellier


WILL Montpellier's announcement that Bullock's management want to buy the social housing subsidiary lead to other offers?

Bullock turns over about £80 million a year working mainly in the north and Midlands on social housing and on a long-term partnering deal with pharmaceutical firm AstraZeneca.

Given the money invested in social housing, Montpellier boss Roy Harrison will want a good price for Bullock and interest will drive the price up.

Mr Harrison is reviving Montpellier after a woeful period before he took over as executive chairman.The Bullock approach boosted the shares.

A good price for Bullock could help Mr Harrison wipe out the group pension deficit, which he has already slashed from a thumping £33.2 million to just £3.3 million.

That reduction led to gossip that Montpellier may be broken up.The Bullock sale will only fuel this rumour.

A break-up was impossible with a big pension deficit but not now, and the idea must have occurred to Peter Gyllenhammar and Johan Claesson, the Swedes who control over half Montpellier's shares.

Both are value investors - people who buy into companies on their uppers and produce a turnaround.

There was little value before Mr Harrison arrived, with one subsidiary, YJL, taking over-valued properties from clients that could not afford to pay.This incurred big losses.

Trading has improved and subsidiaries may now also attract interest.