De La Rue vulnerable to takeover if new CEO fails

DE LA RUE’S newly won freedom from bid talk could only be a temporary reprieve if its new chief executive, Tim Cobbold, is unable to turn the firm around, says a source familiar with the matter.

De La Rue was only able to fend off a bid by its rival, Oberthur Technologies, last week by persuading shareholders that the firm’s new management would be able to push its value back up to levels seen before a contract with its major client, the Reserve Bank of India (RBI), was suspended in July.

Oberthur dropped its bid last Monday after its revised offer of 935p per share was rejected. The withdrawal followed an aggressive campaign to persuade shareholders that the likely loss of the RBI contract made Oberthur’s offer the best exit available.

After the contract’s suspension was announced in July, De La Rue’s share price plummeted 27 per cent from a norm of 900p to around 650p.

Analysts say that new chief executive Cobbold now has a maximum of two years to revive the firm’s value, with both shareholders and Oberthur likely to keep a keen eye on its results in May.

Oberthur has mulled bids for its rival several times over the last six years. Shareholders could look to the firm to step back into the fray if their concerns are not addressed.