Woodford-backed Crystal Amber builds stake in De La Rue following passport company’s “own goal”
Activist investor Crystal Amber has increased its stake in beleaguered banknote producer De La Rue this morning, City A.M. understands, as the company released its second profit warning in less than a month.
De La Rue, which also told investors today that it would not be pursuing a claim against the UK government for handing the production of new passports to an overseas firm, has seen its share price plummet by more than 20 per cent over the last four weeks.
Crystal Amber told City A.M. that the drastically lower share price now leaves the company ripe for the taking by a hungry competitor.
Read more: Woodford-backed activist investor Crystal Amber puts shunned passport producer De La Rue in the crosshairs
“De La Rue is a great British company with a strong heritage and trust is a key element, but it’s now made itself incredibly vulnerable to overseas predators,” said City veteran Richard Bernstein, Crystal Amber’s head.
The investor added that De La Rue urgently needed to work on its “messaging to the City”, as two recent profit warnings, the departure of the finance director and a recoil on its promise to battle the government over new passport contracts have left a poor impression.
De La Rue said earlier today that its decision to ditch the passport appeal had no relation to Crystal Amber’s involvement as a shareholder.
“Having considered all the legal and commercial implications of pursuing legal action, we have concluded that it is not in the best interests of the company to proceed with an appeal,” a De La Rue spokesperson clarified.
Read more: De La Rue shares plunge as finance chief walks and firm warns profits won’t impress
Although Crystal Amber had started building a stake in De La Rue around the time that the passport battle began, the firm said this had just been a “side issue” and it believed there were many other changes to be made in the business.
As of February 2018, Crystal Amber was 29 per cent owned by Invesco and 17 per cent owned by Neil Woodford’s funds.
De La Rue itself has much to prove. At the end of 2010, the company received a takeover offer from French competitor Oberthur valuing the business at 905p per share, or £896m – a sum which it indicated it was willing to raise to 935p.
De La Rue rejected the approach, urging shareholders that it could offer better value itself, until Oberthur walked away from the deal – but the company is now trading at just over 470p.
Read more: De La Rue weighs up appeal after “being undercut by French competitor” on contract for new blue British passport post-Brexit