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Bottom Line: Popular disposal

Tuesday 19 July 1994 23:02 BST
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THE STOCK market reacted warmly to news that Peter Black has sold its cut-price shopping venture, Hornsea Freeport.

The sale price of pounds 4.6m represents 18 times Hornsea's after-tax profits and leaves Black with a handy sum to invest in its main business of making shoes and toiletries for own-label sale, primarily in Marks and Spencer stores.

Hornsea's new management is seeking a full listing and is raising pounds 6m in a placing and rights issue. It hopes to exploit the factory shopping formula, which has worked well in the US.

But the formula has yet to be tested here. Several other multinational operators are in the market and planning permission can be tricky. Black, although retaining a 16 per cent stake in Hornsea, looks well out of it.

Black is on course to report pre- tax profits of pounds 11.5m for the year just ended, implying a multiple of 19 times at 263p, up 7p.

Despite the timely disposal and the apparent strength of Black's relationship with M&S, that rating borders on the over-generous.

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