Printer needs Indians to fight French

DE LA Rue is used to being a target. During the 1940s blitz, it was bombed by the Luftwaffe; Harold Wilson rode to its rescue in 1968 by blocking a takeover from Rank; now it is the French who have the firm in their sights.

Of course, populist politicians will side with the company’s management, which has dismissed Oberthur’s offer as derisory. Losing Cadbury to Kraft was bad enough, they mutter, but the French printing British banknotes? Quelle horreur!

However, a significant number of investors – already irked by management’s decision to keep the approach under their hat for four whole weeks – completely disagree. Oberthur’s 905p-a-share offer probably doesn’t reflect the company’s true value, nor its technical expertise, but some analysts say it isn’t a million miles away.

To be fair, it is awfully difficult to put a price tag on De La Rue. How do you value a firm has lost its biggest customer, the Indian government, at least for now? Last month it announced a halving in six-monthly profits to £23.8m and a 20 per cent reduction in revenues to £209m.

Unless the Indian government moves quickly to show it still trusts De La Rue – and speed is not its strong point – some investors might prefer not to wait and see. Try as it may, the firm’s management is not in a position to play hard to get.

Analysts at UBS say De La Rue is wrong to sniff at the 905p-a-share offer. If management can bid ‘em up, says the broker, then we could have a deal. Until then, the banknote printer needs to enlist the Indians to help it fight the French.