FTSE 250 movers: Tyman soars on US deal; Mobico out of favour

22nd Apr 2024 13:07

(Sharecast News) - FTSE 250 (MCX) 19,637.92 1.27%

Tyman said on Monday that it has agreed to be bought by US metal window and door manufacturer Quanex in a £788m cash and stock deal.

Under the terms of the acquisition, Quanex will pay 240p per share in cash and 0.05715 of a new Quanex share, which is equivalent to 160p.

As an alternative to the main offer, Tyman shareholders could choose to receive shares in Quanex at a ratio of 0.14288 of a new Quanex share to every one Tyman share. This would also value each Tyman share at 400p.

The price represents a premium of around 35.1% to the closing share price on Friday.

Nicky Hartery, non-executive chair of Tyman, said: "This transformative and complementary transaction will strengthen the enlarged business for the benefit of all our customers, employees and other stakeholders.

"In the context of a rapidly evolving North American marketplace, our board ultimately determined that this transaction is the best path to maximising value for Tyman shareholders, who will be able to realise a meaningful portion of their holding in cash at a significant premium to the prevailing share price while also participating in the future upside of the enlarged group.

"Today marks the beginning of an exciting next chapter for Tyman and our talented employees, and we look forward to joining with Quanex to deliver future growth and success."

Tyman said it had received an irrevocable undertaking from Teleios Capital Partners, which owns a 16.4% share in the group, to vote in favour of the deal.

Benjamin Schmid, investment director at Teleios, said: "As a longstanding shareholder of Tyman, Teleios supports Quanex's proposal, which will create a stronger, combined platform of scale, with significant potential to both consolidate and establish leadership positions in existing and adjacent markets."

At 1045 BST, the shares were up 31% at 388p.

Russ Mould, investment director at AJ Bell, said: "While individually this deal may not make much of a ripple, when you consider the sheer volume of firms being snapped up by overseas buyers, the UK market is experiencing death by a thousand cuts."

Jefferies, which rates Tyman at 'buy', said: "The offer by Quanex comes at a healthy premium (35% to Friday's close price), and the implied value per share of 400p is a circa 11% premium to our price target of 360p per share and a circa 13% premium to consensus price targets of 354p, and on our forecasts, values the company at 10x FY24F EV/EBITA & 1.3x EV/sales.

"As such, we believe the offer should be attractive to Tyman holders (particularly given current market conditions), despite the consideration that receiving US-listed shares may not be ideal, and we don't foresee many major holdouts."

Shares in Hipgnosis Songs Fund spiked again on Monday when private equity outfit Blackstone made a potential $1.5bn offer to buy the troubled music rights investor, setting up a bidding war with Concord Chorus.

Hipgnosis on Monday said it would recommend a higher Blackstone bid if it tabled a formal offer. The investment company's fourth and latest proposal valued Hipgnosis at $1.24 per share in cash. HSF shares were up almost 10% in morning trade.

Last week Hipgnosis - which holds the rights to music by Shakira and the Red Hot Chilli Peppers, among others, in its catalogue - agreed to a $1.4bn with Concord Chorus, valuing it at $1.16 per share in cash.

"The board and its advisers will continue to provide Blackstone and its advisers access to confirmatory due diligence, to enable Blackstone to announce a firm intention to make an offer, as soon as possible," Hipgnosis said.

A report also emerged on Monday that rival label BMG's pitched a low-ball bid below Blackstone and Concord.

However, the label's interest in a takeover of was said to have diminished, and insiders said they did not expect it to compete, Sky News reported citing unnamed sources.

Blackstone on Saturday revealed it had tabled previous offers for HSF, as tensions between the fund and its investment adviser, Hipgnosis Song Management (HSM) - in which Blackstone holds 51% - escalated.

Mobico Group reported a fall in profit in its 2023 results on Monday, below the expectations it set at the start of the financial year, despite continued revenue growth.

The FTSE 250 company, formerly known as National Express Group, reported 12.2% rise in revenue, which it put down to sustained efforts in pricing adjustments and boosting passenger volumes across its operations.

It reported a record-breaking year for ALSA, and a significant recovery in North America school bus operations.

However, its adjusted operating profit decreased to £168.6m, from £197.3m year-on-year.

The board said that decline was primarily due to cost inflation, reduced Covid subsidies, and lower profitability in the German segment.

Mobico recorded a statutory operating loss of £21.4m, influenced by restructuring costs of £30m and a £99m charge related to the German rail onerous contract provision.

The group announced new leadership appointments during the year, with a focus on driving growth and operational efficiencies.

Efforts were underway for restructuring in the UK, including the NXTS turnaround, while challenges were persisting in the German market due to labour scarcity, lower productivity, and high inflation.

Mobico said it was optimistic looking ahead, with ongoing pricing adjustments and restructuring initiatives expected to deliver further benefits.

The company said it had secured 43 new contracts, valued at over £1bn, aligning with its 'Evolve' strategy and expanding its presence in key target cities.

Despite a slight increase in covenant net debt and gearing, the group improved its debt maturity and liquidity by refinancing a significant portion of its credit facilities.

Looking ahead, Mobico said it expected adjusted operating profit in the range of £185m to £205m for the 2024 financial year.

"Our 2023 results are below the expectations we set ourselves at the beginning of the year," said group chief executive officer Ignacio Garat.

"The delays due to the additional work relating to the German rail business was regrettable but it is now concluded.

"Although group revenue growth was encouraging, driven by passenger demand and actions taken to recover inflation, this has not translated into an improvement in reported profitability."

Garat said progress was still made in transforming the business, with new leadership appointed in North America school bus and the UK and Germany making a tangible impact, while the first phase of its 'Accelerate' cost efficiency programme delivered ahead of expectations.

"Our focus remains on delivering the benefits of our restructuring programs and in recovering inflationary costs through pricing, while maintaining a relentless focus on the quality of our offering to support growth.

"Opportunities remain to create a more appropriate and sustainable cost structure and we will not hesitate to take action where there is a clear strategic and financial benefit."

Market Movers

FTSE 250 - Risers

Tyman (TYMN) 389.00p 31.42%

Hipgnosis Songs Fund Limited NPV (SONG) 102.00p 10.99%

Energean (ENOG) 1,085.00p 6.48%

Chemring Group (CHG) 362.50p 5.38%

Dr. Martens (DOCS) 70.90p 5.35%

WH Smith (SMWH) 1,290.00p 4.20%

SSP Group (SSPG) 204.20p 4.08%

W.A.G Payment Solutions (WPS) 66.60p 4.06%

Future (FUTR) 644.00p 3.87%

TUI AG Reg Shs (DI) (TUI) 596.00p 3.83%

FTSE 250 - Fallers

Mobico Group (MCG) 53.65p -10.66%

Hochschild Mining (HOC) 149.60p -3.23%

Endeavour Mining (EDV) 1,737.00p -1.70%

Me Group International (MEGP) 165.00p -1.55%

Indivior (INDV) 1,494.00p -1.32%

Man Group (EMG) 248.20p -1.12%

Ashmore Group (ASHM) 182.80p -1.08%

Essentra (ESNT) 172.60p -1.03%

Octopus Renewables Infrastructure Trust (ORIT) 67.60p -0.73%

Polar Capital Technology Trust (PCT) 2,810.00p -0.71%