MARKET REPORT: Nat Rothschild’s Volex swoops on TT Electronics

Small cap components manufacturer TT Electronics experienced a power surge after rival Volex revealed it had made two takeover offers for the firm. But Volex said TT’s board refused to engage in talks and had rejected the overtures.

Volex said its initial cash and paper bid valued Woking-based TT’s shares at 129p each. The company followed that up with an offer valuing TT’s shares at 135.5p each. This valued the takeover target at around £249m against a current market value of £140m. Volex is valued at £623m.

In a statement, Nat Rothschild, Volex executive chair, said his company believed bringing the two firms together would create a leader in the specialist electronics market.

TT Electronics confirmed it had rejected Volex’s takeover proposal, and added it had also declined a higher bid from an un-named third party. The company said it shunned the unsolicited approach because it fundamentally undervalued the firm and its long-term prospects.

The news came a day after TT posted a weak trading update, in which it cut its guidance on full-year profits as well as announcing that its long-standing chief financial officer, Mark Hoad, is intending to retire next September.

Unwanted attention: TT Electronics confirmed it had rejected Volex’s takeover proposal

By contrast, Volex accompanied revelation of its bids with news of improved half-year results, which showed pre-tax profit up 21 per cent and revenue jumping by 30 per cent. The company also said it is on course to meet its full-year expectations for this financial year.

Off the back of the approaches, TT shares jumped 40.5 per cent, or 32p, to 111p, while Volex shares shed 10.7 per cent, or 37p, to 306.5p.

After data showing UK growth slowed in the third quarter, the main London indexes were cautious. The FTSE 100 inched up 0.1 per cent, or 7.58 points, to 8063.61 and the FTSE 250 lost 0.2 per cent, or 46.17 points, to 20476.64.

Two blue-chip hotel operators had diverging fortunes as analysts at Barclays shifted their sector preferences given the implications of the Budget and the US elections.

InterContinental Hotels added 0.1 per cent, or 8p, to 9500p as the Barclays’ analysts raised their rating for the Holiday Inn owner to overweight. But Premier Inn owner Whitbread fell 1.1 per cent, or 32p, to 2909p after the same analysts downgraded its rating to equal weight.

Away from the big time, Solid State plunged 35.3 per cent, or 75p, to 137.5p as the AIM-listed electronics group announced that payments linked to a government defence contract have been paused pending the completion of a strategic defence review next summer. Although the company said it expects the orders to be received in due course, they will fall outside the current financial period.

But on the upside, Angle gained 15 per cent, or 1.5p, to 11.5p as the developer of a unique liquid biopsy innovation presented new data at the American Association for Cancer Research Special Conference highlighting significant advances in cancer diagnostics.