Investment: Bid rumours prompt rethink on De La Rue
Tuesday 20 October 1998
So yesterday analysts were hurriedly updating their break-up valuations of De La Rue after an entertaining story did the rounds that Microsoft was planning to pounce on the troubled banknotes to smart cards group.
Not that the market gave too much credence to the tale. The suggestion that Bill Gates might take time off from his battle with the trust-busters in Washington to mount a bid seemed a little too far-fetched, and De La Rue shares only ticked up 4p to 186.5p.
Nevertheless, it forced investors to ask: what is De La Rue worth?
Coming up with a coherent answer is tricky. For the past few years, De La Rue has seen overcapacity in security printing and over-ambitious development plans in cash systems erode its bottom line. The City, which has been disappointed too often, is reluctant to expect a recovery.
However, De La Rue appears to be tackling the problems. It has shut down a banknote printing plant, cutting the industry's capacity by about 15 per cent and relieving pricing pressures.
Meanwhile, Ian Much, the new chief executive brought in from T&N, has taken personal charge of shaking up the cash systems division. The onset of the euro should provide a welcome boost in demand for the division.
Add in the smart card division, which has potential for explosive growth, and analysts calculate that a break-up value of about 300p a share is not too far-fetched.
In the absence of a bid, institutions will probably wait for an update on strategy from Mr Much before piling in. But for the patient investor, the downside is limited. A long-term buy.
- 1 East 17 bandmember Brian Harvey in 'very desperate situation’
- 2 Germanwings plane crash: Video shows co-pilot Andreas Lubitz learning to fly as a teenager
- 3 Vladimir Putin says Russia will fight for the right of Palestinians to their own state
- 4 Germanwings crash: Captain of doomed plane was only 'on board because he changed job to spend more time with his children'
- 5 WrestleMania 31 results: Seth Rollins stuns WWE as he cashes in Money in the Bank contract to claim title from Brock Lesnar
East 17 bandmember Brian Harvey in 'very desperate situation’
Vladimir Putin says Russia will fight for the right of Palestinians to their own state
Ohio Democrat Teresa Fedor speaks out during abortion debate to reveal she has been raped – and is interrupted by laughter from Republicans
Children take eight Isis captives to be beheaded in latest propaganda video
Jeremy Clarkson 'could be given minder' ahead of a potential Top Gear return
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
Street preacher quoting from the Bible fined for calling homosexuality an 'abomination'
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
Woman filmed launching racist tirade against men on the Tube for speaking in 'own lingo'
David Cameron calls Labour 'hopeless, sneering socialists' while announcing 7-day NHS plans
iJobs Money & Business
£20000 - £35000 per annum: Recruitment Genius: This multi-award winning foreig...
Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...
Negotiable: Recruitment Genius: You will be the first point of contact for all...
£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...