RE: times article part 113 Sep 2020 22:33
Saga’s floundering share price has attracted activists. Elliott Advisors, the fund led by Paul Singer, took 5% last year and pushed for a break-up. A separate activist has quietly built a near-5% stake. And while the De Haan recapitalisation offer has been put to shareholders, who will vote on October 2, it is not the only one on the table. A rival approach from two private equity firms, spearheaded by Mark Wilson, the former chief executive of Aviva, was rejected by Saga’s board, which believed the 33p-a-share offer undervalued the company, despite the premium.
The views of shareholders are mixed. One top-10 investor said that while they backed the board’s decision to reject Wilson’s approach, any higher offer should be put to shareholders. “If someone gives me 40p a share. I would take it.”
The activist investor that has built a significant stake, alongside Elliott Advisors, said Saga should be “putting itself up for sale”. The investor, who wished to stay anonymous, said an extraordinary meeting could be called to demand the board kick off a sales process.
De Haan believes Saga’s shareholders are in good hands — his. “With the potential it’s got, shareholders should look forward to that being reflected in higher share prices in the future.”
The father of eight, who also has two stepchildren and 15 grandchildren, began working for his father in the 1950s, when he and his brother earned pocket money carrying guests’ suitcases up the stairs of the family hotel. Most were elderly and had come to the Kent coast on a new-fangled “package” holiday that gave them transport, accommodation and meals for less than £10.
Sidney De Haan had come up with the all-inclusive deal to keep the hotel full during the lean winter months. As it grew and ventured into overseas holidays, and eventually cruises, Saga extended its reach to insurance, radio and a print magazine. Customers loved its attention to detail. Before booking a hotel, staff would count the number of steps and include the figure in its reservation system with frail guests in mind. By the time it was sold, it had annual sales of £340m and pre-tax profits of £51m.
Over the years, however, Saga became weighed down by debt and buffeted by competition in insurance. The collapse of Monarch Airlines in 2017 affected its travel business. It has also spent £600m on two new ships, contributing to net debts of £646m. Last week, it reported a half-year loss of £55.5m on sales of £192.4m, down 51.4% on last year.
De Haan believes the business lost sight of what set it apart from competitors. “A lot of younger people are particularly interested in the price,” he said. Saga customers, on the other hand,will pay for features such as help organising roof repairs or broken glazing (which costs 75p a week). “That extra 75p is of no interest to most 50-year-olds, but to a 78-year-old that feature becomes very attractive.”
He added: “I’m 72 at my next birthday, and I have a much better insight [
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