Engineering firm Cobham’s shares rocketed this morning as it agreed to a £4bn take-private deal by private equity giant Advent International.
Shareholders stand to receive 165p per share in the acquisition, a premium of 34.4 per cent on yesterday’s close price of 122.75p.
David Lockwood, the chief executive of the defence and aerospace engineering firm, has set about bolstering Cobham’s financial performance in the last two-and-a-half years after repeated profit warnings crippled its stock.
The FTSE 250 firm took a £160m charge in February to settle a dispute with Boeing over a delayed aerial refuelling programme.
“This offer reflects the potential for future growth and improving performance, and is an endorsement of our turnaround strategy and our hard working people,” he said today.
Advent managing director, Shonnel Malani, added: “We strongly believe in the importance and potential of Cobham’s businesses and look forward to bringing our long track record of successful stewardship of companies to ensure that Cobham flourishes under our ownership.”
Cobham’s board has unanimously backed the takeover bid, saying it represents a 50.3 per cent share price premium over the last three months.
Today shares climbed 34 per cent to 164.8p per share.
Shareholder Artemis Investment Management, which holds a 5.13 per cent stake in Cobham, has also thrown its support behind the merger.
Artemis needs 75 per cent of shareholders to back its acquisition of Cobham.
Cobham’s board has hired Bank of America Merrill Lynch, JP Morgan and Rothschild to advise them on the deal, saying the terms are “fair and reasonable”.
Neil Wilson, chief analyst at Markets.com, said the deal is the latest in a growing trend of take-private acquisitions where companies seek to escape “the glare” of public markets.
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“Cobham’s had its troubles after a hot streak of profit warnings. It also a sign that weakness in sterling continues to make UK companies attractive to foreign buyers,” Wilson said.
“The pound is at its weakest in two years and could bounce on a deal with the EU – carpe diem for foreign buyout specialists.