Bid speculation could be the main hope for shareholders in banknote printer De La Rue, according to analysts at Numis.
Four years ago French group Oberthur walked away from a £900m, 935p a share bid for its UK rival, and since then things have gone downhill. After three profit warnings from De La Rue there was talk earlier this year that Oberthur or a private equity bidder might be looking at a 750p a share offer, but so far nothing has emerged.
Last week De La Rue reported a 35% decline in full year pretax profits to £38.9m, with chief executive Martin Sutherland - who joined the company in October - outlining his new strategy, including doubling R&D over the next five years and more use of third parties for manufacturing.
Numis analyst Charles Pick said:
Recent full year results were in line with prior guidance...so the main interest was in the new chief executive’s strategy review. The latter is, by his own admission, evolutionary not revolutionary, but it does contain some interesting facets. However, detail remains sketchy on the new strategy’s ramifications.
De La Rue appears the proverbial sitting duck after three warnings in 2012-14, the scale of the dividend cut noted and enduring tough trading this full year. As the new chief executive has emphasised though, the group retains some market leading positions and has an excellent name in banknote design plus the development of novel security products.
A bidder would probably have to pay a 40% premium to last Friday’s close and a case could be made for a 50% premium despite the large pension deficit.
However De La Rue are currently down 3.5p at 518p - a far cry from the level of the Oberthur bid or even the speculated bid price from earlier this year.
