Brady has received a recommended all-cash offer at 10p per share (a 50.8% premium to the closing price), valuing the issued share capital at £8.3m, from Hanover Active Equity Fund II, a private equity (PE) investor focused on SMEs in the UK and Nordic markets. The cash offer has been declared final, will be declared unconditional as to acceptances based on 50% of the share capital and may only be increased if there is a counter-offer. Before the bid, Brady had been looking to secure additional funding for a turnaround strategy, and although negotiations have advanced, the company has not yet secured unconditional funding.
Written by
Brady |
Recommended cash offer at 10p |
Recommended offer |
Software & comp services |
20 September 2019 |
Share price performance
Business description
Analysts
For the purposes of the Takeover Code, Edison Investment Research is deemed to be connected with Brady plc. |
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Brady has received a recommended all-cash offer at 10p per share (a 50.8% premium to the closing price), valuing the issued share capital at £8.3m, from Hanover Active Equity Fund II, a private equity (PE) investor focused on SMEs in the UK and Nordic markets. The cash offer has been declared final, will be declared unconditional as to acceptances based on 50% of the share capital and may only be increased if there is a counter-offer. Before the bid, Brady had been looking to secure additional funding for a turnaround strategy, and although negotiations have advanced, the company has not yet secured unconditional funding.
Year end |
Revenue (£m) |
PBT* |
EPS* |
EV/sales |
DPS |
Yield |
12/17 |
22.2 |
(3.0) |
(5.7) |
0.2 |
0.0 |
N/A |
12/18 |
23.2 |
0.3 |
0.0 |
0.2 |
0.0 |
N/A |
12/19e |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
12/20e |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
After market close on 14 October 2019, Brady announced a recommended cash offer for the business at 10p per share, valuing the issued share capital at £8.3m, from the Hanover Fund, a PE fund focused on public and private SMEs in the UK and Nordics. The offer represents a premium of 50.8% over the closing mid-market price of 6.63p per Brady share on 11 October 2019, the last business day before the announcement. Prior to the bid, Brady had been looking to secure additional funding for a turnaround strategy (£1.5m in the short term, £15m to fully implement the new strategy) and although negotiations over funding options have advanced, the company has not yet been able to secure unconditional funding. In particular, Brady has a specific cash payment due on 15 November 2019. The company expects to be able to manage its funding requirements until 30 November 2019. Subject to the successful completion of the offer, Hanover is expected to work with Brady’s management to implement the transformation plan and is prepared to commit funding. We have removed our estimates and valuation until the offer period ends.
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Research: Healthcare
Deinove released its H119 results on 26 September 2019. The company reported progress with most of its projects in the pipeline, which is well diversified across a number of different programmes and technologies. We believe the antibiotic asset DNV3837 is the most valuable, as it is a pure drug development programme. Deinove has been preparing for the Phase II efficacy trial in C. diff infections and the first patient should be recruited in the coming weeks. The company also reported multiple developments in its bioactives portfolio. The first two commercialised products (Phyt-N-Resist and Hebelys) are expected to start generating sales this year. We have slightly increased our valuation of Deinove to €72m or €4.2/share.