Tuesday, 20 May 2008

Anite bid talks terminated

Anite shares have fallen by 8% to 44p (11.00am) on news that bid talks have been terminated.

I quote (with permission) from George O'Connor (Panmure Gordon) note this morning:

"Our earlier view was that a bid was likely to be ‘cheeky’ – given that Anite has been trying to sell Public Sector for the past two years. Operating results from Anite are set to deteriorate and so there is a risk of 1) no bid as it fails buyer due diligence; and, 2) no agreement on fair value.

Why no MBO? Anite has been marketing its Public Sector division for about two years and so should be well known to potential buyers spanning trade and industry – we still don’t know why an MBO hasn’t been the option. There is no shortage of buyers for public sector IT companies – note the recent acquisition activity in Civica, Northgate Information Systems and IBS – and it is telling that Anite escaped interest in this phase.

Latest operating news This was the Q3 IMS, 10 March, which was woolly, with Anite stating that Group profitability is dependent on the latter weeks of H2, so leaving the door open for it to miss estimates. As to the divisions:

- Wireless - Handset Testing weakness continues;

- Travel continues to perform strongly, with better than expected order intake – we highlighted this in February;

- Public Sector - a continuing improvement in underlying profitability at Local Government, but market conditions have not improved.

Net debt increased marginally."

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