Markets await metal MBOs

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Next week, the old economy may show it still has the power to stun the market as metal-bashers queue up to put a sting in the tail of their results announcements.

United Industries and Senior Engineering will be delivering their full-year earnings statements on Tuesday and Wednesday respectively. But these results could well turn out to be their actual final results as public companies, with both groups hotly rumoured to be on the verge of management buy-outs.

Andrew Parrish, Senior's chief executive at the helm for three profit warnings and a 70 per cent slump in the share price, is expected to use the announcement to launch a management buy-out of his own company.

A source close to the company said: "This has been on the cards for a little while, but if they don't want another buyer to come in, it's now or never for the MBO team."

Shareholders in the group, which makes specialised parts for the aerospace industry, have considered it a glaring target since its stock fell to 65p in December. Despite initial suggestions that the company might be bought by larger engineers such as TI, Rolls Royce or Smiths Industries, an MBO is now tipped as favourite.

In January, the Independent on Sunday reported that a team led by the chief executive was in the advanced planning stages of the MBO play, known internally as "Project Saturn". Observers estimated that a buy-out deal would value the company at about £200m. But following increased interest in the stock, its market cap now stands at £240m.

One broker suggested that a likely offer price might be around 130p per share, which would value the group at about £390m. "It's a well-focused group, and easily worth that. Even so, if the MBO works, they may need to sell some assets to finance it."

The City is more sceptical about the rumours hanging over United Industries' head.

The group, a £30m springs-to-hip joints UK engineer, has done a good job of putting its house in order, but the efforts are not reflected in the share price. Many see these as ideal motives and circumstances for an MBO.

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