A flurry of activity in De La Rue shares on Wednesday morning.
The reason?
A statement from Oberthur, the French company that made a hostile offer for the banknote printer last year, announcing the appointment of James Hussy as an adviser to chairman Jean Pierre Savare.
Mr Hussey is, of course, the former CEO of De La Rue. He fell on his sword following those banknote production issues.
Anyway back to this morning’s statement:
Commenting on the appointment, Chairman Jean Pierre Savare said, “We are absolutely delighted to welcome someone of James’s ability and depth of experience to work with us. His detailed understanding of the market and long-standing relationships across the industry will be invaluable to Oberthur as we seek to continue to grow our banknote and security printing business.
Furthermore, following recent press and analyst speculation, we want to clarify, without any reservation, that we have no intention of making an offer for De La Rue plc”.
Now, Oberthur could not have made another bid for De La Rue until July 25th — that’s six months after abandoning its previous offer. So what’s the point in making this statement and locking themselves out for another six months?
Well, two things, according to Olivetree Securities.
One, it puts on a lid on the share price and two, it will help with the disposal of a stake in its card services business, the proceeds of which would help finance a fresh offer for De La Rue.
Today’s announcement achieves two things – firstly it puts a lid on the DLAR shareprice, keeping it from running away – Oberthur are the only realistic bidder, so the shares shouldn’t start to bake in inflated M&A speculation into July now.
Secondly, bearing in mind Oberthur have been widely reported to be selling a stake in their Card Services business (potentially to finance a DLAR bid) it shows the potential P/Equity buyers of that asset that they aren’t forced sellers on a tight time-line, both sensible messages for Oberthur to convey at present.
So our conclusions are that this intrduces some formal delay to Oberthur’s ability to come back for DLAR, but ultimately they still very much want to own this asset and we will see another approch eventually. Any M&A probability in DLAR’s price shouldn’t decline too far.
Indeed, no one should be in any doubt that Jean Pierre Savare wants to buy De La Rue and is prepared to play the long game to get it.
If that means waiting another six months or even a year, so be it. He will wait.
Related link:
Cashing out of De La Rue – FT Alphaville
Confessions of a banknote printer - FT Alphaville
More confessions from a banknote printer - FT Alphaville
Further confessions from a banknote printer – FT Alphaville
De La Rue: licensed to kill money - FT Alphaville