DAVID Murray is selling the metals business that made his name for about £112 million and closing two loss-making open-cast coal mines in Scotland.
The Rangers chairman said he had received a surprise offer for Murray International Metals (MIM) from a US private equity group, and decided to sell the business he founded nearly 30 years ago. The division made up about a third of his business empire, Murray International Holdings (MIH), but the tycoon said he would replace it with a string of acquisitions. "It is a momentous day," he said, "but nothing lasts for ever. If you want to grow a business you have to sell assets as well as buy them."
MIM is being bought by Jefferies Capital Partners, which plans to merge it with another steel group in its portfolio.
Separately, Murray is to close down two coal mines with the loss of about 50 jobs. The Airdrie site has already ceased production and will be turned into flat land, but Kirkcaldy is to be turned into a business and housing complex in a joint venture with the local authority.
"We had to stop digging," Murray said. "It's too difficult now to mine coal in Scotland - we'll make more money from the land." The coal assets have made a loss of 8m in each of the past two years.
Murray said he was now in pursuit of "big acquisition targets" and expected to complete two in the early months of next year. Both are believed to be divestments from publicly listed groups. He said he would be taking "a small dividend for himself" from the proceeds of the sale, although he had yet to decide how much. None of the cash will be spent on Rangers.
Murray International Holdings - which had sales of 600m last year - focuses on metals and property, although it also owns call centres and waste management businesses. Murray said the plan was to increase turnover to more than 1 billion by 2010, "with profits to suit". He admitted that if he achieved the goal MIH would still lag behind car dealer Arnold Clark in terms of revenue, but said the firm would be the largest multi-business group in Scotland.
"It's like downhill skiing," he said. "Once you start going down you can't stop. We've got some great young people, and we are seriously on the acquisition trail."
The group has lifted its borrowings this year above 500m, but Murray played down the burden - arguing that much of it was tied up in property deals.
MIM turned in a pre-tax profit of 21.9m in its latest financial full year against 5.5m in the previous period, thanks to the growing global demand for steel, especially from China. MIM's area of speciality - offshore structures and shipbuilding - has also seen demand grow as oil firms explore new regions.
But Murray said the boom time for the industry may now be over. "China is now an exporter of steel," he explained, "so demand from there has tailed off. The steel price has also come back. [Selling the business] is the right thing to do."
Murray set up MIM in 1976, and after a string of acquisitions it now makes up about 45 per cent of the group's metals portfolio. Much of the business has been moved overseas in the past three decades, leaving only 60 employees in Scotland. It is not clear whether those jobs will be affected by the deal, although managing director Ken Cockburn will continue to run the business. MIH employs 4,000 workers in Scotland.
MIH has made several acquisitions in the past 12 months, including Apollo Metals, a specialist metal supplier to the aerospace industry, and the contact centre arm of telecoms group Thus. It also helped with the bail-out of Alexander Dennis, the bus manufacturing arm of Transbus, and has a 30 per cent stake in the Falkirk-based business.
Turnover of 1bn in sights
MURRAY International Holdings boosted turnover by 58 per cent last year to 600 million, generating operating profit of 37.3m. The metals division that is now to be sold represents 28 per cent of MIH, generating 172m of sales, but David Murray said that in 2001 it made up a 62 per cent slice - illustrating its diminished importance to the group. Murray - who paid himself 1.7m last year - said he remained confident that he could increase overall turnover past the 1bn mark despite the sale, a target he has set for 2010. "Rangers gets all the headlines," he said, "but it's a big business".