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Chemring: Credit Suisse keeps neutral rating and 330p target.
With the benefit of hindsight, I have come to the conclusion that this has not been a very well run company, at least in the recent past, as Carlyle seem to have concluded by walking away. When the last set of results were announced I recall that the dividend was increased by a reasonable amount but surely at that time the board must have had some idea of the problems ahead with the subsequent profit warnings. It was either irresponsible or perhaps to deceive the market that all was well. Linked to this was the sale of the marine unit in June to reduce debts (or maybe to relieve a cash flow problem due to the announced contract delays). I suspect that there may well be more bad news in the pipeline.
This is what happens when you turn over whole markets to parasitical speculators, rather than investors!
The company attempted to reassure investors that near-term opportunities remain intact despite the withdrawal of interest and tough market conditions. "Whilst Chemring continues to face near term challenges resulting from defence budget constraints in its NATO markets, which are not expected to ease in the immediate future, the company has market leading positions and manufacturing expertise in the fields of counter-IED, countermeasures, munitions and pyrotechnics. "In addition, the company's non-NATO markets will continue to provide the business with further opportunities and gives a balanced exposure to global defence spending."
US asset management firm, The Carlyle Group, has called off its long, drawn-out discussions with Chemring about a potential takeover of the FTSE 250 defence contractor. Ahead of the US firm's third-quarter results scheduled for release on Thursday morning in New York, the company announced that it no longer intends to make an offer for Chemring. In a statement on Wednesday afternoon, Chemring said: "On August 17th 2012, Chemring announced that it had received a highly preliminary expression of interest from Carlyle in relation to a possible offer. Carlyle today confirms that it does not intend to make an offer for Chemring." Shares were down over 13%at 234.5p by the close in London. The offer deadline had been pushed back on two separate occasions; the company said it would give a further update in its pre-close trading update on November 27th. Chemring disappointed the market last week after reducing its profit expectations for the year ended October 31st following delays and technical problems in a number of contracts.
Thanks for that, i shoud have read it before i posted..... bread lol, thanks for the info though. Still a very interesting couple of trades earlier in the day. Yes i think it may well be a good oportunity tommorrow as some of the smaller pi's panic, yes they may have some troubles but they are still a profitable business!!
Buying opportunity when more people bail in the morning?
Chemring Group PLC (“Chemring” or “the Company”) notes today’s announcement by The Carlyle Group (“Carlyle”) that it does not intend to make an offer for the Company. On 17 August 2012 Chemring announced that it had received a highly preliminary expression of interest from The Carlyle Group (“Carlyle”) in relation to a possible offer for the Company. In accordance with Rule 2.6(a) of the Code, Carlyle was required, by not later than 5.00 p.m. on 14 September 2012, to announce a firm intention to make an offer for Chemring in accordance with Rule 2.7 of the Code or announce that it did not intend to make an offer. At the request of the Company, the Panel consented to an extension of this deadline on 14 September and again on 12 October, to enable the parties to continue their on-going discussions regarding a possible offer for the Company. The Company will give a further update on 27 November in respect of its preliminary results for the year ended 31 October 2012, which are expected to be announced on 24 January 2013. Whilst Chemring continues to face near term challenges resulting from defence budget constraints in its NATO markets, which are not expected to ease in the immediate future, the Company has market leading positions and manufacturing expertise in the fields of counter-IED, countermeasures, munitions and pyrotechnics. In addition, the Company’s non-NATO markets will continue to provide the business with further opportunities and gives a balanced exposure to global defence spending. Following the announcement on 23 October, Mark Papworth has now joined the Company as Chief Executive Officer. Prior to joining Chemring, Mark served as CEO of the Gas Turbines Services division of Wood Group plc, a leading FTSE100 company. During Mark’s tenure at Wood Group, he implemented and delivered a strategic review which resulted in a successful turnaround, improved manufacturing capabilities and substantial improvements in profitability.
Yeh I just read the news. Thanks!
Carlyle have bailed out
Can anyone shed any light on the sudden drop and recovery?
What you are referring to is called Bed and Breakfast. It used to be a good scam to remove gains from the taxman. The law was changed so that if you buy back a share within 30 days then it is treated as a B&B gain, as opposed to a normal (Section 104) gain. A B&B gain is the difference in the selling price and the new purchase price. Whereas a Section 104 gain is the difference in the original purchase price and the selling price. It looks like a good deal at first glance, but the newly purchased shares have to be put back into a Section 104 holding at the price that the shares were first bought at. When you eventually sell out this holding you will have exactly the same gain if using B&B or Section 104. So all you will achieve is a delay in paying CGT. This may be useful if you are close to the CGT threshold, but the extra work required to manage this is a pain in the a**e.
I dont know looks pretty strange i must admit and you would have thought that the price would have slid somewhat ! The only thing i can think of is there use to be something called bread and breakfasting, not sure if it is still allowed by HMRC, if you come to the end of a financial year and have made too much but have a paper loss your sitting on, you sell them cyrstallize the loss, then buy back straight away. loss can be offset against the proffits, you still have your shares which hopefully you would have bought back for the same price pretty much as the sale price. It would be interesting to know if you can still get away with that, somebody on the board would know I could however be completeley wrong
Anyone have an opinion on the above trades just gone through....the bid dropped in the proceeding 30mins....bid now back up.....surely price would have dropped significantly had these been sales. Having said that buys should have had the opposiite response. Interesting given where we are in the bid process.
thanks for your kind advice: i'm still holding and think that carlyle would have withdrawn by now if they weren't VERY interested: after all that the share has endured during the past couple of months if they didnt fancy the share they have had plenty of reasons to call everything off: USA election result anxiously awaited !!! ....... although i think mr obama will re-elected.. best of luck Kieran
I still believe if the Carlyle offer does materialise it will be above the £4.00 mark. Keiren , have you closed your positions or are you holding?...I think the bid will come good and you will come out laughing..!..I hope so.! Regards..
Something peculiar is happening with this excellent company, or once excellent company..Another profits warning, resignations, licences, licence delays etc...Carlyle are clearly still interested is something positive though. The results of the American elections will play an important role for CHG. Obama cutting defence budgets whilst Romney's first priority is defence. A Romney win and CHG benefits greatly, even without a bid, or gives CHG a better bargaining position for a better offer.The share price recently was as low as it was in 2006..Buyers of Friday still optimistic a bid will materialise in the next few days or another extension..I am tempted to buy again at this level as this is a good company and would be hoping other bidders, perhaps even BAE would be be a suitor, will show merger or takeover interest.. Lets hope it isn't another Lamprell. Weak BUY !
still have strong faith that it could bond up to average value of 300.
"This delay the group believes is unlikely to be resolved in the near term and will continue into its new financial year." -- We are 2 days into the new financial year now, it may well take some months to sort out, as we do not know which country it is being exported to or indeed how sophisticated a bit of kit it is its difficult to make a judgement call.
I hope you are right as I am an investor here too. However, I do not find the company's wording very reassuring. -- "This delay the group believes is unlikely to be resolved in the near term and will continue into its new financial year." --- Unlikely to be near term, to me, means medium to long term.
Perhaps, possibly, indefinately. For now, all we know is that the issue is delayed, but still in progress. Money has a funny way of making things happen. You may well be right, and you may not. Until we have further news, who is to say? I choose to take the wording at face-value. It is merely delayed. It will not be lost or cancelled or impossible until such a time that they report it, if at all.
I fear that you may be down playing one of the delays announced. --- "The supply of vehicle based mortar systems for a Middle Eastern customer was experiencing delays in the granting of export licences for a limited number of parts. This delay the group believes is unlikely to be resolved in the near term and will continue into its new financial year. --- Export Licences are required for high tech items that the West (often America) does not want to get into the hands of a potential enemy. Countries can also be placed on a denied parties list if the international community disapproves of these arms being used to surpress it's own citizens. Perhaps these mortars were ordered by Syria, or another now unstable Middle Eastern country. In which case it is possible that the license could be delayed indefinitely.
Seems to climbing quite steadily this morning. Obviously Im not the only one who thinks this is an attractive buy-in price!
Thanks, that link pretty much answers my question!
Indeed, my thoughts exactly. Even though this years profits have been marked down slightly, it should only result in bumper profits for next year. Am I correct in thinking that the deadline for the T/O bid is next friday?