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Textile, hygiene and safety solutions group Berendsen (BRSN) is today’s winner, +25% on news of a revised offer from French workwear rental and laundry service Elis (ELIS) aimed at creating a stronger Pan-Euro leader in textile and facility services. The BRSN share price reaction is typical for a takeover offer, however, the 36-40% deal premium is above the usual 25-30% offered to take full control.
Today’s revised offer has already been rebuffed however (even more quickly than the first, “significantly undervaluing the company and its prospects”), and BRSN sees no reason for further discussion. It deems the offer ‘opportunistic’ based on the company being in investment mode. However, the fact the shares resumed a downtrend last Monday and remain only 20% off their end-March 4yr lows surely plays a part. Even more importantly, another 2.5% dive by GBP/EUR this week cheapens the 6.6% net improvement in today’s revised offer.
This could just be an attempt to extend what is a very familiar M&A dance and eke out an even better offer for shareholders, but it would surely be a case of three strikes and you’re out. And the offer of both cash (440p, unchanged; ~50% of BRSN prior share price) and shares (0.426, up from 0.411 end-Apr) in the new entity means BRSN shareholders would still retain access to capital gains potential, albeit on a diluted basis, owning just 35% of the new group. The cash & share mix & match facility clearly exists as an option to allow BRSN shareholders go all in or simply take the cash + shares offered.
Shares off their highs of the day (they were +28%) but are holding above their post-profits warning highs of 1074p on Oct 27, when the shares plunged 17% on what turned out to be the first leg of a 40% decline. The question now is whether the shares can break above Brexit-induced lows of 1130p and whether it is a third attempt from Elis that helps deliver it?
Mike van Dulken, Head of Research, 18 may 21017
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