Companies: FKL ��

Falkland Islands Holdings (FIH) is paying �10.27 million for leading UK fine art and antiquities handler Momart.

Bishops Stortford-based FIH operates a range of transport and logistics services in the Falkland Island and elsewhere, including the Portsmouth Harbour ferry, and suggests that adds a degree of commercial logic to the deal. Momart transports, stores and installs valuable paintings and sculptures, and boasts 13 per cent of a UK market put at �85 million a year.

John Foster, managing director of AIM-quoted FIH, says the company envisages overseas expansion opportunities for London-based Momart, into markets such a Dubai, India, Russia and the Far East. He says FIH, which made �2 million pre-tax in the year to March 2007 and another �794,000 in the six months to last September, likes Momart, which made �1.2 million pre-tax in the year to August, for several reasons.

These include Momart’s reputation for quality service, its client list (including Damien Hirst, the Royal Academy, the Henry Moore Collection and New York’s Metropolitan Museum of Art) and expert management, including long-serving exhibitions chief Anna Maris. FIH is paying up to �7.78 million of the �10.27 million purchase price in cash between now and 2010, partly funded with a �4 million bank loan, with the rest in shares.

The deal comes with some strings, such as the retention of certain Momart directors and non-competition covenants. Three-quarters of the new FIH shares being issued are subject to a 12-month lock-in.

FIH shares, which fell from 607p to 232.5p between early 2005 and late 2006, now stand at 392.5p, down 2.5p today, valuing the company at �35.5 million – less than twice the stock market value of its 16 per cent stake in exploration play Falkland Oil and Gas. They have speculative appeal, subject to overall market conditions.

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