De La Rue’s Transformation: A £300 Million Takeover Looms
In a significant development for the historic British company De La Rue, an American predator is on the verge of finalizing a £300 million acquisition of its authentication division. This move, spearheaded by Crane NXT, a New York-listed industrial technology group, is poised to reshape the landscape of De La Rue, a company that has been synonymous with banknote printing for over two centuries.
The Deal: What’s at Stake?
Sky News has reported that Crane NXT is close to sealing the deal, which would leave De La Rue as a pure-play currency printer. This transition is particularly noteworthy as the company currently serves over 40 central banks globally, making it a key player in the currency printing industry. The acquisition is expected to be a positive outcome for De La Rue, which has been grappling with financial strain for several years.
The anticipated transaction is not merely a sale; it is expected to eliminate De La Rue’s existing debt and inject an unspecified amount into the company’s pension scheme. This financial restructuring comes after the company had to defer tens of millions of pounds in pension payments last year, highlighting the urgency of its financial situation.
A History of Challenges
De La Rue’s recent history has been marked by a series of corporate challenges, including profit warnings and operational difficulties in countries like India and Kenya. In response to these issues, the company appointed Clive Whiley, a seasoned corporate troubleshooter, as chairman. His mandate was clear: to repair the company’s battered finances and restore its reputation in the market.
The company has been exploring strategic options for months, including the potential break-up of its operations. Reports indicate that Crane NXT has been working with Goldman Sachs to facilitate the acquisition of De La Rue’s authentication arm, which primarily serves government clients by providing traceability software to combat fraud.
The Future of De La Rue
As the deal progresses, speculation is mounting regarding the future of De La Rue’s currency division. Bankers at Deutsche Numis are reportedly advising the board on the authentication sale, suggesting that further divestitures may be on the horizon. Under revised UK listing rules, De La Rue may not need to seek shareholder approval for the deal, streamlining the process.
The historical significance of De La Rue cannot be overstated. Founded in 1813 by Thomas De La Rue, the company has evolved from producing straw hats to becoming a leader in banknote printing. Its first foray into paper money came in 1860 for the government of Mauritius, and by 1914, it was printing 10-shilling notes for the UK government amid the First World War.
Market Response and Shareholder Outlook
As of the latest reports, De La Rue’s shares closed at 94p, giving the company a market capitalization of approximately £185 million. Notably, the stock has seen a remarkable increase of over 50% in the past year, reflecting a potential recovery in investor confidence as the company navigates its restructuring efforts.
Conclusion
The impending acquisition by Crane NXT marks a pivotal moment for De La Rue, a company with a storied history that now faces a transformative future. As it sheds its authentication division and focuses solely on currency printing, the implications for its operations, financial health, and market position will be closely watched by industry analysts and investors alike. The next few months will be crucial in determining whether this strategic shift will lead to a revitalization of the iconic brand or further challenges ahead.