FTSE 250 movers: Spirent surges on takeover; Inchcape hits the brakes
By Frank Prenesti
Date: Tuesday 05 Mar 2024
(Sharecast News) - FTSE 250 (MCX) 19,269.20 0.10%
Spirent Communications said on Tuesday that it has agreed to be taken over by US communications equipment company Viavi in a £1bn deal, as it revealed a slump in profits.
Under the terms of the acquisition, Viavi will pay 175p a share. This includes 172.5p in cash and a special dividend of 2.5p per share, in lieu of any final dividend for the year to the end of December 2023.
The price represents a premium of around 61.4% to the closing Spirent share price on Monday.
Spirent chairman Sir Bill Thomas said: "Spirent is a business with a differentiated value proposition, diversified portfolio of technology solutions, deep customer relationships and talented people. Despite these strengths, we recognise that the Spirent Group has been operating against an increasingly challenging market backdrop.
"Having considered in great detail the interests of all Spirent shareholders and Spirent as a whole, the Spirent board believes that this all-cash offer recognises the underlying value of Spirent. That is why we intend to unanimously recommend this cash offer, which not only represents an attractive outcome for our investors, but also provides a significant opportunity for employees, customers and other stakeholders through what is a highly strategic and highly complementary combination."
At 1355 GMT, the shares were up 62% at 175.76p.
Neil Wilson, chief market analyst at Finalto, said: "The move just adds to the sense that the shallow waters of the London market are not enough for tech firms to thrive."
News of the takeover came alongside Spirent's results for the year to 31 December 2023, which showed that adjusted pre-tax profit fell 62.2% to $49.7m, while reported pre-tax profit slid 80% to $22.9m. Revenue declined 21.9% to $474.3m and order intake was 23.8% lower at $477m amid "challenging market conditions".
Chief executive Eric Updyke said: "As we progressed through 2023, the market landscape became increasingly challenging. The elevated prevailing interest rates and inflationary pressures impacted customers, especially those in the telecommunications sector. These customers responded by taking significant action, particularly in the second half of 2023, to cut costs and by reducing their capital expenditure to preserve cash."
Updyke said the "current challenges" for the telecoms industry are expected to continue and it is difficult to predict how long they will last.
"Whilst we continue to believe the mid to longer term drivers for our business remain intact, as announced separately today, the board has concluded that the offer from Viavi should be recommended to shareholders given the value it places on our business," he said.
Geotechnical specialist contractor Keller Group more than doubled annual earnings and lifted its dividend by 20%.
Pre-tax profit for the 2023 calendar year jumped 123% £125.6m with the annual dividend lifted to 45.2p a share.
"Whilst political and macro-economic uncertainties will undoubtedly remain and impact our markets in the short term, our current level of trading together with our robust order book mean that we enter the new year with confidence," the company said on Tuesday.
"The strong momentum of the business is encouraging and whilst inevitably there will be fluctuations across the group, our diverse revenues and improved operational delivery underpin our expectation that 2024 will be another year of underlying progress."
Automotive distributor Inchcape detailed an "excellent" annual performance on Tuesday but tempered expectations for future growth.
Inchcape said group revenues were up 41% in 2023 at £11.4bn, pushing adjusted pre-tax profits 35% higher to £502.0m. Organic revenues were up 12%, while distribution organic growth was 16% stronger. Adjusted earnings per share rose 18% to 33.9p.
Operating profit growth and higher operating margins of 5.8%, up from 5.1% a year earlier, more than offset the impacts of higher interest rates.
The FTSE 250-listed group expects 2024 to be "another year of growth", albeit a moderated one, with the group issuing "prudent expectations for recovery in certain markets", which were weaker than previous years, as it makes an "even stronger focus on cost management" to deliver a "moderated short-term growth profile". Inchcape added that its medium to long-term outlook pointed to a return to higher levels of growth.
Chief executive Duncan Tait said: "Inchcape produced a strong set of results in FY 2023, with an excellent performance across all our regions. The business continues to deliver, with double-digit organic revenue growth, margin progression, EPS growth and high levels of cash generation.
"We maintained positive momentum across APAC, supported by acquisitions, while Europe & Africa performed strongly, despite muted demand. The Americas produced growth in many markets, supported by Derco's performance, and while some markets became increasingly challenging, we continued to take market share across the region."
Market Movers
FTSE 250 - Risers
Spirent Communications (SPT) 175.90p 62.27%
Trustpilot Group (TRST) 198.80p 8.93%
Keller Group (KLR) 941.00p 7.54%
Hiscox Limited (DI) (HSX) 1,179.00p 5.17%
TP Icap Group (TCAP) 190.10p 4.85%
Centamin (DI) (CEY) 100.40p 4.80%
Hochschild Mining (HOC) 104.70p 4.70%
Bakkavor Group (BAKK) 100.00p 4.17%
Hipgnosis Songs Fund Limited NPV (SONG) 59.90p 3.45%
Harbour Energy (HBR) 274.20p 3.32%
FTSE 250 - Fallers
Inchcape (INCH) 623.50p -8.38%
Aston Martin Lagonda Global Holdings (AML) 157.60p -4.48%
IWG (IWG) 177.30p -4.06%
Watches of Switzerland Group (WOSG) 394.60p -3.85%
Travis Perkins (TPK) 718.80p -3.57%
Dr. Martens (DOCS) 91.90p -3.26%
Allianz Technology Trust (ATT) 346.50p -3.08%
Oxford Instruments (OXIG) 2,125.00p -2.97%
Marshalls (MSLH) 298.00p -2.80%
PZ Cussons (PZC) 94.80p -2.77%
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