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You can find the current article at its original source at http://www.theguardian.com/business/nils-pratley-on-finance/2013/aug/27/kentz-takeover-amec-bid
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Kentz's latest figures will fail to dispel takeover talk | Kentz's latest figures will fail to dispel takeover talk |
(25 days later) | |
Kentz, the Irish contractor to the oil, gas and mining industries, started on the back foot when Amec, a practised acquisition machine, came knocking last week. | Kentz, the Irish contractor to the oil, gas and mining industries, started on the back foot when Amec, a practised acquisition machine, came knocking last week. |
The problem was simple: the Malaysian investors who had successfully rescued Kentz in the 1990s had sold half their 26% stake a year ago, at 430p a share. Since one of the investors is also Kentz's chairman, there was a credibility issue in resisting Amec's indicative offer at 565p-580p, or about £700m. | The problem was simple: the Malaysian investors who had successfully rescued Kentz in the 1990s had sold half their 26% stake a year ago, at 430p a share. Since one of the investors is also Kentz's chairman, there was a credibility issue in resisting Amec's indicative offer at 565p-580p, or about £700m. |
A lot can happen in a year to change a company's value, of course. But if Kentz is serious about putting up a stout defence, it may have to produce stronger stuff than was contained in yesterday's interim numbers. Revenues were up 2%, to $775m, and reported pre-tax profits were 3% higher, at $52.7m. That was all in line with analysts' forecasts but was still lacking a certain transformational quality. | A lot can happen in a year to change a company's value, of course. But if Kentz is serious about putting up a stout defence, it may have to produce stronger stuff than was contained in yesterday's interim numbers. Revenues were up 2%, to $775m, and reported pre-tax profits were 3% higher, at $52.7m. That was all in line with analysts' forecasts but was still lacking a certain transformational quality. |
True, the backlog of orders – up 12%, to $2.8bn – looks solid enough. Kentz is also chatting about a busy period for bidding for new work, and expressed its confidence by pushing the half-year dividend up 20%. All the same, there were few specific gems to encourage long-standing shareholders to stay loyal. | True, the backlog of orders – up 12%, to $2.8bn – looks solid enough. Kentz is also chatting about a busy period for bidding for new work, and expressed its confidence by pushing the half-year dividend up 20%. All the same, there were few specific gems to encourage long-standing shareholders to stay loyal. |
They may reflect that if the bid buzz evaporates Kentz may once again be viewed as a well-run but ultimately lower-margin contractor whose shares traditionally trade at a discount to larger, engineering-focused rivals. | They may reflect that if the bid buzz evaporates Kentz may once again be viewed as a well-run but ultimately lower-margin contractor whose shares traditionally trade at a discount to larger, engineering-focused rivals. |
We shall see. Amec clearly hasn't offered its best shot yet, and it would have to go well above 600p to persuade Kentz to open its books, especially if the German M+W Group is still sniffing. But the share price, steady at 565p, is saying Kentz has not killed the takeover talk yet. | We shall see. Amec clearly hasn't offered its best shot yet, and it would have to go well above 600p to persuade Kentz to open its books, especially if the German M+W Group is still sniffing. But the share price, steady at 565p, is saying Kentz has not killed the takeover talk yet. |
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