The board of Andor Technology (AND) looks set to spend the holiday season mulling over a potential sale of the business instead of a nice glass of spiced wine. Just weeks after Oxford Instruments (OXIG) made an indicative offer of 500p a share in cash, the scientific camera specialist is unhappy and eagerto squeeze a higher bid out of a potential suitor.
Oxford's bid represents a 25 per cent premium to Andor's share price before the approach became public knowledge, but Andor's board is disappointed that Oxford has not increased its offer price further despite months of negotiations. The directors are now playing hardball and fully evaluating their "strategic alternatives", including actively soliciting higher bids from other suitors or remaining independent. We think the offer looks a decent one given Andor’s subdued financial performance over the past few years. These results reveal a modestly downbeat market for scientific instruments, struggling under government-related spending cuts - underlying pre-tax profit of £7.4m, although in line with previously lowered expectations, was still down 26 per cent. That said, record order intake swelled the order book by a third, and confidence is clearly growing.
Broker finnCap forecasts adjusted pre-tax profit of £8.6m in 2014, giving adjusted EPS of 21.5p (from 18.9p in 2013).
ANDOR TECHNOLOGY (AND) | ||||
|---|---|---|---|---|
| ORD PRICE: | 510p | MARKET VALUE: | £155m | |
| TOUCH: | 490-510p | 12-MONTH HIGH: | 510p | LOW: 279p |
| DIVIDEND YIELD: | 0.6% | PE RATIO: | 27 | |
| NET ASSET VALUE: | 159p* | NET CASH: | £22.9m | |
| Year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 33.1 | 4.61 | 14.4 | nil |
| 2010 | 42.7 | 5.81 | 15.7 | nil |
| 2011 | 57.3 | 8.74 | 21.6 | nil |
| 2012 | 58.3 | 8.93 | 24.5 | 2.00 |
| 2013 | 54.6 | 6.33 | 18.1 | 3.15 |
| % change | -6 | -29 | -26 | +58 |
Ex-div: 5 Feb Payment: 28 Feb *Includes intangible assets of £15.3m, or 48p a share | ||||
