Small Talk: Punch deal could leave a bitter taste with investors

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It's rare for a zero-premium takeover offer for a profitable business to have much chance of success, but that is what has happened at Punch Graphix, the Aim-listed digital printing group.

Its parent group and suitor, Punch International, a Belgian investment firm, has won control of Punch Graphix, despite offering shareholders nothing in compensation and without obtaining the board's backing.

Punch International, which floated Punch Graphix in May 2005, confirmed it would make an offer for the company after the market shut on the last trading day before Christmas 2006.

It offered 128p for every Punch Graphix share, the same price the shares were trading at prior to the offer, valuing the group at £132m.

Punch International's rationale for the bid is that Punch Graphix has performed poorly, in terms of share price and results, since coming to the market priced at 98p per share.

It also questions strategic decisions made by Punch Graphix since it became a public company, despite the fact that Guido du Mare, chairman of Punch International and the main mover behind the bid, sits on the board of Punch Graphix. The company alleges that he has voted in favour of every decision taken by his fellow directors. Mr Du Mare says he has voted against the board on several occasions during the past six months.

For some shareholders, the criticism of Punch Graphix is bizarre given that the company is on target to achieve a 27 per cent jump in pre-tax profits, and that the share price has risen 30 per cent since listing. Punch Graphix is also committed to paying out 30 per cent of post-tax profits by way of a dividend this year, an unlikely event now that the bid has succeeded.

This deal could leave a bitter taste in the mouth for investors who do not back it. Under the terms of the offer, Punch International needed 50 per cent of the vote for the offer to go unconditional - not a big ask as it already owned 49 per cent. However, Mr Du Mare should think carefully about the Punch Graphix offer. The shareholder list includes many high-quality institutional names, and London investors can be slow to forgive.

Energetix excites

During the tail end of last year, Small Talk highlighted Energetix as an exciting prospect in the alternative energy arena.

Today the AIM company should have some good news for investors. Small Talk has learned that Energetix has started initial field trials of its Genlec product - an ingenious gadget which when placed inside an ordinary domestic boiler provides consumers with electricity, in addition to traditional water and central heating. It is estimated that Genlec saves the average household between £150 and £200 per year on its combined gas and electricity bill.

If the final trials, expected to take five months, prove successful, consumers will get the chance to test Genlec for themselves.

Drilling success at CMR

Expect more positive news on Cambridge Mineral Resources' interests in South America this week.

The AIM-listed company is fully focused on the continent and is believed to have extended its investment in Peru. Last October, CMR bought a 50 per cent stake in the Argento mine and will today announce that it has agreed to buy out its partner, taking full control of the gold and silver prospect.

Initial drilling results from Argento have been positive.

DCD Media wins major role with BBC

DCD Media, the AIM-listed television production company, has won its biggest contract to date with the BBC.

The win, which will be announced today, will see DCD's Box TV unit receive a £5.9m commission to produce The Last Enemy, a major drama serial expected to be broadcast on BBC1 this year.

The Last Enemy, by the acclaimed screenwriter Peter Berry, will comprise one 90-minute programme followed by four 60-minute episodes and will look at how technology could transform Britain into a surveillance society that threatens human relationships and trust.

DCD is in advanced talks with Max Beesley and Anamaria Marinca, who won a Bafta for her role in Sex Traffic, to star in the drama, with filming due to begin in London this month.

DCD's Box TV division has had a number of successes in recent years. In 2006 it produced the mini-series Bon Voyage for ITV; it also made The Wind in the Willows for the BBC.

The latter, starring Matt Lucas and Bob Hoskins, was watched by 5.7 million views on New Year's Day and has received critical acclaim.

On Friday, DCD shares closed at 0.91p, valuing the company at £39m.