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Hartest Holdings / Elektron
- BY: Andrew Hore |
- POSTED: 30/07/2010 |
- COMMENTS: Add yours
Elektron is making a mandatory bid for instrumentation supplier Hartest Holdings following the purchase of Peter Gyllenhammar’s stake.
Elektron paid 90p a share for Gyllenhammar’s 29.95% stake. This took the engineer’s stake to 53.1%. That values Hartest at £8.2m. The Hartest share price hit 92p at around the time of its full year figures but it closed at 85.5p yesterday.
One year ago Elektron was talking about a bid of around 25p a share for Hartest. Delta Controls subsequently suggested it was willing to offer 50p a share for Hartest. Earlier this year, there was agreement in principle for a 68.33p a share bid from Delta with Elektron pledging its 23.2% stake to that offer. However, Gyllenhammar was not happy with the level of the bid and Delta pulled out.
Hartest was disrupted by the previous bid talks but it recovered strongly last year. The integration of some of the group’s businesses on one site is beginning to bear fruit and there are more productivity benefits to come. All the businesses are profitable and Hartest swung from a loss of £865,000 to a profit of £1m on revenues up from £20.7m to £22.2m in the year to March 2010. House broker Westhouse forecasts a rise in profit to £1.3m this year. That means the bid values the company at around nine times prospective earnings for 2010-11.
There was net cash of £107,000 at the end of March 2010. There was also an asset held for resale worth £750,000. The business is cash generative.
Elektron is in a strong position and it intends to appoint directors to the board and try to get Hartest’s Aim quotation cancelled. It wants to carry out a strategic review of Hartest’s operations. Elektron is unlikely to want all of the operations and the likes of Judges Scientific might be interested in some of them.
The Hartest board says that it is reviewing the bid.
Elektron is raising £3.11m at 20p a share to help finance the acquisition. That is a big discount to the market price, which fell 3p to 28p, valuing Elektron at £24.7m.
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