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Private Equity Firm Atlas Holdings Launches £263m Bid for Banknote Printer De La Rue
De La Rue, the company that prints banknotes for the Bank of England, is the subject of a proposed £263 million acquisition by US-based private equity group Atlas Holdings. This development follows the board’s rejection of a potentially higher offer from a City financier, setting the stage for a possible takeover battle.
Takeover Offer and Rival Bid
A takeover contest appeared imminent on Tuesday after Atlas Holdings’ agreed offer of 130 pence per share was immediately shadowed by reports of a rival bid. Edi Truell, a City financier, through his investment vehicle Pension SuperFund Capital, was allegedly preparing a counter-offer of 132.17 pence per share.
According to Sky News reports, Pension SuperFund Capital had informed the De La Rue board of its intentions on Monday.
De La Rue Board Backs Atlas Bid
However, De La Rue has since stated to its shareholders that it evaluated the ‘preliminary and conditional nature’ of Truell’s latest proposition. Concerns included the ‘absence of guaranteed funding’. Consequently, the board reaffirmed its support for the Atlas Holdings offer.
The company cautioned shareholders that there is no guarantee that Truell will make a firm offer.
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Atlas’s 130 pence per share bid represents a 19 percent increase on De La Rue’s share price at close of trading on December 11, before the current offer period commenced.
De La Rue’s shares experienced a surge of 15.6 percent, reaching 129.5 pence by Tuesday afternoon. This increase brings the total share price gain over the past year to approximately 63.5 percent.
The Atlas proposal excludes De La Rue’s authentication division, which is slated for sale to industrial technology firm Crane NXT for £300 million, expected to be completed at the beginning of May.
Strategic Rationale for Acquisition
De La Rue stated that Atlas Holdings’ ownership would ‘better position’ the company for future investment. It is also expected to assist in navigating the ‘cyclical and competitive’ dynamics of the currency market.
Connecticut-headquartered Atlas Holdings’s portfolio includes British construction firm Bovis and graphic and creative services agency ASG.
Established in 1821 by Thomas de la Rue, the company is a major global banknote printer, responsible for over half of the world’s banknotes, including the new UK sterling notes featuring King Charles III. De La Rue also produces security features for various identity documents.
Challenges and Performance
The Basingstoke-based business has faced difficulties since the Covid-19 pandemic. The rise in contactless payments has negatively impacted the demand for physical currency.
Further complications arose from the loss of a significant UK Government contract in 2018 to print post-Brexit passports, an economic downturn in Sri Lanka, and increased costs for microchips and raw materials.
In its financial results for the six months ending September 28, De La Rue reported a 10.2 percent decline in turnover to £145.1 million. This was primarily attributed to the rescheduling of certain contract deliveries within its currency division to the latter half of the financial year.
Atlas Holdings’ Perspective
Peter Bacon, operating partner at Atlas, commented: ‘In De La Rue, we observe an organisation that holds a leading position in its sector. However, it has encountered numerous headwinds in recent times.’
‘We are confident that our strategic resources and capital will provide support and enhancement to the De La Rue business as it moves forward,’ Bacon added.
De La Rue CEO’s Statement
Clive Vacher, Chief Executive Officer of De La Rue, stated: ‘Atlas represents the ideal partner to guide De La Rue into its next phase of development.’
‘Crucially, under Atlas’s ownership, we can secure long-term stability for both our clientele and workforce, effectively positioning the business for its subsequent chapter,’ Vacher concluded.
Wider Trend of London Stock Exchange Delistings
De La Rue’s anticipated acquisition occurs amidst a broader trend of overseas buyers acquiring companies listed on the London Stock Exchange at reduced valuations.
Last week, NHS property owner Assura agreed to a £1.6 billion offer from a consortium involving investment firms Kohlberg Kravis Roberts (KKR) and Stonepeak Partners.
Data from financial analysis group Dealogic indicates that sixty companies, with a combined worth of £59.4 billion, were removed from the London Stock Exchange in the previous year due to takeovers.
Notable delistings include cybersecurity firm Darktrace, video games services provider Keywords Studios, and music rights holder Hipgnosis Songs Fund.