Date: Tuesday 23 Oct 2012
Morgan Crucible, the British maker of ceramics used in wind-turbine blades, has become a potential take-over target, analysts believe.
This comes after its share price tumbled by 33% - albeit from 14 year highs - in 2012, on the back of a slowdown in revenue growth and a worsening profit outlook, Bloomberg says.
As such, shares of the Windsor-based company are now trading at their lowest valuation relative to earnings since 2009. Even based on analysts’ reduced estimates for next year Morgan Crucible is still cheaper than 81% of similar-sized speciality-chemicals producers for the materials industry, according to data compiled by Bloomberg.
In fact, just this month US conglomerate 3M launched a take-over of Morgan Crucible’s peers, Ceradyne, and a company such as the former US outfit could now be interested in having a go at Morgan Crucible so as to capitalise on its relatively low valuation, Panmure Gordon believes.
While sales and orders may remain depressed in the months ahead, Peel Hunt analyst Dominic Convey says an acquirer still may find value in the business, given the firm’s “very strong market positions in niche segments”. From that perspective, “then it is an attractive target”, he added.
Nevertheless, not all analysts are of the same view, as is the case with those from Royal Bank of Canada (RBC).
Lastly, another option mooted by some is a merger with rival Cookson.
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