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Castle Acquisitions Share Discussion Threads
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Having read through the key elements of the offer I have concluded that it is a 'done deal' with irrevocable undertakings in excess of 90% of the shares regardless of any new offer that may emerge. Sulzer is a large company and has the cash, so there should not be any reason why the deal should not proceed. ie Shareholders will receive 108p (if they do not sell before the deal has been completed).
I am already well over this year's capital gains tax allowance and the deal is likely to be not completed until after the budget has taken place (I would suggest payment at the end of July??), so shareholders will be in a bit of a dilemma if they fear that the new capital gains tax rules apply as from budget day as shareholders will be unable to defer their capital gain as the offer will become unconditional.|
|so if i buy at 100p can i make 8%|
|Ah well, sorry to see this one go, never really written about very much but a highly profitable investment.|
|I'll settle for that.
|et voila. 108p. Well done to holders.|
|I think the 15 times is on the high side. Plus the pension fund decifit.
not surprised acquirors are looking. healthy trading performance and certainly cheap on a P.E basis.
I'd be happy with a £1.00:-)|
|I'm sure the pension fund will be a stumbling block to that kind of price. I held DLTA and the acquiror basically deducted 100mm from a fair (PE ex cash) price because of the size of the pension fund, even though the deficit was only around 50mm.
CSU also has a large pension fund (130mm) relative to the size of the company and their agreed contribution is rising from 3.6mm to 7.8mm per year. If it's a similar case to DLTA, I think they'll deduct 40mm for the pension, giving a takeout price of around 110p.|
|I don't normally post on this board, but my usual haunt seems to be devoid of CSU posters at the moment!!
I held shares in Glissen (GLI) earlier in this year. Their share price was trading at very similar levels to CSU. They had an agreed cash takeover at 140p a share. So I would anticipate that a successful bid for CSU ought to be in that sort of region. Taking EPS as 9.5p then the suggested takeover price would be 15*9.5=142.5p. By coincidence this is a very similar figure to my expectations.
However, the share price is bound to trade at a significant discount (such as at the current 78.5p) until an agreed bid is made, and a failure to agree is likely to result in a fall in the share price. The bull points are that there is more than one party negotiating, the initial share price movement indicates that there are serious bidders in the ring, the weak £ means that overseas (eg American) bidders would find CSU relatively inexpensive) and importantly (like CFX) the shares are dominantly held by relatively few holders so an agreement with them will guarantee a successful take-over.
Having just over 39k shares in CSU I am particularly hopeful for a successful takeover at a good price, and whilst failure to agree a price would be very disappointing I have great expectations for the company's future should a deal not be struck. My reading of the accounts is that the pension deficit is not going to be major stumbling block, there is loads of cash, a good 15% profit margin, a rapidly expanding business and importantly they are a major (dominant??) prestige player in their areas of operations. Furthermore, as the BP Gulf disaster was mainly blamed on equipment failure, I would expect equipment maintenance and repair in the future to be given much more importance than now.
Having decided on the price, the next question is what would the timescale be for getting cash for our shares? I would anticipate a maximum of one to two months for negotiations and for bidding until the best and final offers. Two months for due diligence, shareholder meetings, court agreements etc. Then another month for the share trading to cease and cash paid. Say payment in October??|
|I don't believe they should sell for anything less than 15x EPS|
|Thanks DesWalker. Helpful.
It seems my look is timely as there seems to be some action today, although based on your comments it could therefore have the share price pushed around by low volumes. Sounds like a trade buyer the best option for PI's
I did manage to get a small toe in the water but with the big spread I need an even greater rise to show a profit! Bloody greedy MM's|
|I'm long via NAS which is the largest holder, has 12% of its assets in CSU and stands at a 30% discount to NAV.
The free-float is very low and the spread wide so it isn't widely followed.
It is very cheap on a PE basis but only fairly cheap when one adjusts for the debt incl the pension deficit. Nonetheless it is an attractive stock which ought to appeal to a trade buyer or Private Equity outfit in due course. Very little execution risk with only a few shareholders holding sway but the price would obviously have to be right for them to sell out...|
|Is there any broker coverage on this company?
looks very cheap on fundamentals, but lack of activity on this BB maybe a sign that this cpompanies stock is not being effectivly marketed, hence the big spread and low PE, 6 times for a growth company!!|
|tiredoldbroker ..... I agree with all you say. Shame about the spread but perhaps it keeps short-termers out which should allow the share price to find a realistic level. I'm looking at this as firstly finding its value and thereafter an aquisitive growth investment.|
|Imp .... I only used them for rewinds up to 11KVA. That was a long time ago - 1990's. I used them more recently in my own business before I sold up but only small motors. I did visit their workshops several times and was very impressed with what I saw.|
Did you use them for rewind of electric motors,engineering services,or calibrations?|
|Dowding & Mills market overview:
|To give the lowdown on this company it was born out of Dowding & Mills. D&M is a long established and highly respected company with workshops throughout the UK. They rewind, repair, maintain and install industrial electic motors and alternators. I have used Dowding and Mills on several occasions in the past with much satisfaction. The company has made its first aquistion of a 50% stake in a Middle East company of similar nature. Valuation as I write is low and the share price is rising. Could quite easily double from here in a short space of time imo. A company with growth potential in a fairly defensive sector (even in bad times electric motors break down and have to be repaired/maintained.) A niche ripe for consolidation????|
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