Firth Rixson in £50m bid talks
Article Date: Dec 06 2002Shares specialist engineer Firth Rixson (FRX) almost doubled this morning to 21.75p when the company announced it was in 'advanced' discussions over a cash offer at 25.75p a share. The full-listed group also announced a disappointing swing into the red for the year to September today. James Crux reports.
Sheffield-headquartered Firth Rixson (FRX) saw its shares rise 10p to 21.75p in early trading when chairman Sir John Parker revealed 'we are in discussions that may lead to a recommended cash offer at 25.75p a share'. He did not disclose the identity of the potential bidder, but news of the talks outweighed the simultaneous report that the company had lost more than £6 million in the year to September.
Firth Rixson operates in the UK, US and Europe, supplying steels, rings, and forgings to the nuclear and aerospace markets, as well as the car and oil industries. Its latest financial year was tough and the company's order book suffered from challenging aerospace markets, where its customers were struggling.
Parker explains that the bid talks are taking place 'against this background and depressed valuations for small cap engineering stocks'. He adds that the prospective bidder has completed due diligence.
He expects to make an announcement shortly, though there is no guarantee an offer will be made. The board has deferred the recommendation of a dividend because the discussions are at such an advanced stage.
Today's annual numbers show previous pre-tax profits of £7.2 million turning into a £6.3 million loss after rationalisation costs and a huge £10.7 million write-off against the company's 'Special Steels' business and the US-based 'rings' unit 'Viking'. Both endured a trying year.
Group profits before tax, goodwill and exceptionals fell to only £7 million from £12.1 million, and earnings fell to 2.5p a share (4.1p). Continuing turnover was £200.1 million (£219.5 million).
The shares have been mired between 52-week peaks and troughs of 26.75p and 8p. At 21.75p the business is valued at £42 million.
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