Lucas sells off fluid power business

LUCAS Industries, the troubled motor components group, yesterday began its restructuring programme with the sale of its fluid power systems business, writes Neil Thapar.

In October Lucas spelled out a disposal plan under which it would discard four activities it considered non-core, including fluid power. The others are a UK car parts retailer and two aerospace units.

The fluid power business, with annual sales of more than pounds 100m, is being sold to Sophus Berendsen, a Danish company. The two sides have signed a preliminary agreement but the deal is subject to due diligence.

Lucas declined to reveal proceeds of the sale, but analysts estimate the business could change hands for about pounds 40m.

The group is planning to raise a total of pounds 100m from its disposal plan over the next few months. Talks for the sale of the other businesses were 'progressing well', a spokesman said.

All four activities are expected to contribute to the group's profits in the current year ending 31 July.

Yesterday's move comes at a time when Lucas is struggling with a deep recession in its primary markets. Two months ago, it announced the loss of 2,750 jobs involving the closure of 16 factories.

It has also been hit by management problems and lost Tony Edwards, its managing director, who was tipped to become the group's chief executive, after a boardroom row. Earlier in the year, David Hankinson quit as finance director.

Lucas shares closed 1p lower at 131p yesterday.