Kingfisher and Sir Geoff beat embarrassment factor

SO SIR Geoff has pulled it off. Barring an 11th-hour banana skin, Kingfisher's chief executive Sir Geoff Mulcahy should soon be able to announce the group has succeeded in getting away one of Britain's biggest-ever rights issues.

When first launched, the oneforone cash call was at a 50% discount to Kingfisher's 310p price. But the shares tumbled amid the market turmoil and things looked grim for a while. As the shares touched 157p at one stage, it seemed as if the underwriters might really have to earn their £40m fees. The shares recovered to 193 3/4p yesterday, helped by some handy rumours that the giant Home Depot of the US could be measuring up the group for a bid.

As the £2bn issue was underwritten, Kingfisher was always going to get its money. But the strong take-up avoids fresh embarrassment for a group and chief executive that have attracted more than their fair share in recent years.

The cash will help pay for Kingfisher's £3.3bn takeover of Castorama, the French DIY group. Not everyone is convinced of the merits of the deal, though, and once the post-rights euphoria has evaporated Kingfisher will have its work cut out to make it succeed. Early signs for cross-Channel co-operation were not auspicious, with the French resorting to the courts to block the takeover. Constructive discussions are said to have been held in recent weeks, however.

Meanwhile, the price for getting the cash call away - Sir Geoff 's head - means that the architect of the Castorama deal will not be staying around at Kingfisher long enough to see it reap the rewards. On the other hand, if it doesn't work out, that will be someone else's problem.

Sweet and sour

THE revenge of the old economy is sweet. At the height of the newmedia madness, shares in Greggs halved as the Geordie baker committed the ultimate crime - it had no internet strategy, no plans to deliver sausage rolls to your door via internet orders or to buy a dot com start-up.

It wasn't fashionable, but Greggs stuck to what it was good at - making sausage rolls, sandwiches and cakes and selling them through its shops chain. To a City dazzled by the untold riches promised from the new economy, that strategy sucked. It was far more impressed by companies such as Megalomedia, the media vehicle created by former advertising guru Lord Saatchi and his novelist wife Josephine Hart. Megalomedia went on a buying spree - website design companies, internet name registration services; the whole new-economy deal.

Greggs managing director Mike Darrington, meanwhile, was more interested in creating the perfect doughnut than the perfect deal. The group has not issued a single share in its near-20 years as a public company and any acquisitions have been paid for in cash.

Today, as Greggs reports a 13% rise in half-year profits, it is on course to make more than £35 million for the full year. It is valued at around £350m, although its shares have recently come back from a peak of £40 to just under £30.

And what of Lord Saatchi's Megalomedia and its grandiose plans? The shares crashed 75% from their peak and, in what must rank as the ultimate humbling of the new economy, it now plans to turn itself into a manufacturer of novelty cakes and muffins.

Perhaps it's the humiliation, or perhaps he just doesn't know a lot about cakes, but Lord Saatchi is not expected to hang around as chairman much longer.