Kentz’s shares soar on rejected takeover offers

Suzie Neuwirth

SHARES in Kentz leapt as much as 25 per cent yesterday, after the FTSE 250-listed engineering firm rejected two indicative takeover bids on the grounds that they undervalued the company.

Kentz’s larger London-listed peer Amec made an approach on 5 August valuing the company at 565p to 580p per share, valuing the firm at around £680m, higher than Friday’s closing price of 476p.

German construction group M+W also made a proposal, which Kentz said was lower than the Amec bid but did not give any further details.

The two rejected approaches have already gone some way to boosting the market’s valuation of Kentz shares, which analysts and investors say are trading far below their true worth. Rival offers are now expected to emerge, with insiders predicting a bidding war.

“It’s about time, Kentz has been a sitting duck,” an analyst with close knowledge of the company told City A.M. “The offers have validated the company and should provide a higher floor for the share price.”

The analyst said that he did not expect the unsolicited bids to lead to a deal as there was too large a difference between the value of the firm and the offers, adding that Kentz’s board and management would not want to sell.

It is thought that Kentz is now waiting for Amec to make the next move, as the specialist construction firm has a 28-day “put up or shut up” deadline to firm up its offer or walk away.

Amec has previously said that it is looking to make acquisitions in the oil and gas sector, but would consider a cash return for shareholders if no deals were made by the fourth quarter.

It declined to comment yesterday on whether it plans to make a formal offer for Kentz before the deadline.

Kentz is understood to be talking to shareholders ahead of next Tuesday’s interim results to explain why it rejected the proposals, reminding them that it is trading at very low multiples.

Kentz’s shares closed 24.2 per cent higher at 591p.



UBS and Investec are acting as Kentz’s defence advisers on potential takeover bids. The UBS team is led by James Robertson and the Investec team is led by Chris Sim and George Price. Sim joined Investec as a director of corporate broking from Evolution Securities in January 2012, where he had been since February 2005. Previously he was at Credit Suisse and BZW. In that time he has been involved in numerous initial public offerings (IPOs) and secondary placings. While at Evolution, his deals included Kentz’s IPO, fundraisings for Coal of Africa, Afferro Mining and UK Coal, Sterling Energy’s acquisition of Whittier Energy and Emerald Energy’s acquisition by Sinochem. Price joined Investec in January 2012 having previously worked in the natural resources team at Evolution Securities. He has acted for a number of resource-focused companies including Circle Oil, Nautical Petroleum, Jupiter Energy and Afferro Mining. He was a key member of the team advising Firestone Diamonds on its takeover of Kopane Diamonds in 2010 and ENK on its acquisition by DMCI Holdings and D&A Income. He has acted on numerous fundraisings for energy companies.