28th Mar 2014 09:38
LONDON (Alliance News) - Shares in Manroy PLC rose strongly Friday after it said it had agreed a GBP16 million takeover by Belgian firearms company Herstal SA, ending months of talks that eventually hinged on a sale of Manroy's stake in a US business for a nominal sum.
In a statement, the British maker of heavy machine guns, weapon mounting systems and turrets said its shareholders will get 85 pence in cash for each share in the deal which its board has recommended.
Manroy shares shot higher last November when it said it was in preliminary takeover talks with Herstal, Italy's Beretta Holding SpA and US Ordnance Inc. It quickly said talks with US Ordnance had ended, while talks with Beretta stalled as it focused on active talks with Herstal.
However, the talks took time, and the deadline for Herstal to declare a firm offer or walk way under UK takeover rules had to be extended three times.
Herstal had required that Manroy sell its 49% stake in its US unit before it would make an offer. Manroy said it had talked with a number of parties about a sale between August of last year and February of this year, but didn't get a firm offer for the stake, mainly because any buyer would immediately have had to contribute new working capital to the struggling business. Manroy therefore sold the stake in the US business to a director of that business for a nominal sum in late February to rescue the Herstal talks.
"This offer is a welcome next step in the development of Manroy's business. Being part of a larger platform is expected to secure further growth across all our business areas. The offer is also attractive to shareholders and delivers a material premium to the price before Herstal's approach was announced," Manroy Chairman Andrew Blurton said in a statement.
It said the offer price was a 51.8% premium to its closing share price on November 25, the day before the formal offer period started.
Manroy said Herstal had already received irrevocable undertakings to accept the offer in respect of a total of 10.3 million Manroy shares, or 54.1% of the British company's existing share capital. The Belgian company has also received letters of intent to accept the offer from Schroder Investment Management and Ashcourt Rowan Asset Management in respect of another 11.8% stake.
"We are pleased to announce the offer and to see such strong support for the offer from the outset. The acquisition of Manroy fits well with our strategy and gives us a footprint in a strategically important market," Herstal Chief Executive Philippe Claessens said in the statement.
In a separate statement, Manroy said it made a GBP6.6 million loss in the year to September 30, 2013, compared with a GBP2.1 million loss a year earlier, as costs rose and it made a GBP5.1 million provision for the disposal of its stake in the US business for a nominal sum.
Its revenues to GBP8.9 million, from GBP7.4 million, and excluding the impairments, its profit after tax rose to GBP0.2 million, from GBP0.1 million.
Manroy, like many peers in the defence sector, has been suffering in the last couple of years as the UK and US governments have reduced defence spending. However, it is now more optimistic about its prospects.
"The group has entered the new financial year with an increased order book and a continued growth in enquiries from potential customers not previously supplied by the group," Bluton said.
Manroy shares were up 10% at 82.5 pence Friday morning, one of the biggest increases on AIM.
By Steve McGrath; [email protected]; @SteveMcGrath1
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