Mears Share Discussion Threads

[iii spy] 02/1/2010 18:10

So to reverse the irrevocables a price greater than 34.1p needs to be made by AHI, assuming DD comes up favourable (no reason why it shouldn't in my mind).

Does anyone here have the experience to price the company (SOR) and work out what MER would be willing to pay? This should give us some idea of where this could go.

[phillis] 02/1/2010 10:00

they won't so they will extend the offer and wait to see if Allied make a bid - which will need to be cash

[iii spy] 31/12/2009 15:42

Nice one phillis, also the major shareholder has 28% of SOR so MER will not get the 75% they need without securing their shares. Interesting indeed. Lets see what AHI do, any idea when they are likely to make a move?

If MER do not get 75% by 12/1 what happens?

[phillis] 30/12/2009 16:00

The irrevocables are not irrevocable in the advent of a higher offer

[geovest] 30/12/2009 13:16

Could be an interesting scenario. MER has already secured 35% irrevocable acceptance of their offer. This may have increased since and gives them a string position to spoil any competitive deal.
Speculation is that Allied Healthcare is the other party. They are much smaller than MER with a M/cap of £78m and already have debt of £22m, and may struggle to raise an additional £27m+ without a rights issue. Therefore an all cash offer may be unlikely.
I would still say that MER has the advantage.

[phillis] 30/12/2009 09:46

Nice to have an alternative cash offer if you are a SOR holder

[rivaldo] 23/12/2009 08:33

Interesting to see Supporta's major shareholder complaining about MER's offer price, and another party in the frame. They're pretty much behind the curve though in only now doing their due diligence, so MER have pole position having posted their offer document. Which all seems to verify that MER are getting a bargain.

Arbuthnot said this yesterday per UK-Analyst:

"Arbuthnot Securities published a note on support services firm Mears Group (MER) which discussed the benefits of the acquisition of Supporta, announced on 18th December. The broker viewed the move as having "sound strategic rationale", as it will add 60,000 hours per week to Mears' existing 90,000 hours in its domiciliary care business. It also has little geographical overlap and the London focus of Supporta will bring "a sustainable higher margin business into Mears' care division", with Supporta's care arm achieving an 11% margin as opposed to 5.7% at Mears. In addition, the care market is a growth one, with contracts becoming larger and long-term in nature and government policy adding to the opportunity.

Arbuthnot expects the acquisition to add 6.1 million pounds of operating profit to Mears, with the potential for 4-5% accretion in the first year of the merged firm. In addition, Mears itself has announced 113 million pounds of contracts providing the broker with "a high degree of confidence" in the firm. Arbuthnot kept its 'buy' stance with an unchanged target price of 340p. The shares rose 1p to 273p."

[rivaldo] 20/12/2009 08:17

More positive comment on the deal from RBS:



"Shares in Supporta soared 3½p to 28p after the home care provider agreed to a £27.2 million takeover by Mears, the mid-cap social housing group. Mears, down 4p to 265½p, said the deal was aimed at building its old age housing services business, which would now be able to go after larger and more comprehensive contracts. Supporta's shareholders will receive 0.115 Mears shares for each Supporta share they hold.

Clive Grace, chairman of Supporta, said that the offer was attractive in its price and that he was happy to take Mears shares, which have significantly greater liquidity than Supporta's.

Bob Holt, chairman of Mears, said the deal would be transformational for its care business. RBS said the deal was strategically sensible and came as no surprise in a consolidating market."

[rivaldo] 19/12/2009 08:06

Good stuff in the papers - I hadn't seen Altium's 355p valuation before:



"Dealers gave the thumbs up to Mears' (4p off at 265.5p) £27.2m agreed share-exchange offer for Supporta (3.5p up at 28p), which provides local authorities with carers to work in people's homes.

Bob Holt, boss of the social housing and domiciliary care firm, said the deal was ' earnings enhancing and transformational'. Altium Securities has a target price of 355p for Mears, adding the Supporta deal 'stacks up strategically and financially'."



"Panmure Gordon welcomed the move, saying:

The deal will increase Mears's presence in the Domiciliary Care market, potentially doubling its Domiciliary care revenues and enhancing margins. It looks to be a sensible course of action; we retain our positive stance and buy recommendation."



"Mears set to buy Supporta
By Matthew Kennard
Published: December 19 2009 02:57 | Last updated: December 19 2009 02:57

Mears has agreed to buy Supporta, which provides outsourced homecare services, in a £27.2m ($43.9m) all-share deal.

Mears, which primarily provides maintenance and repairs for social housing, first went into the homecare market via the £22m acquisition of Careforce in 2007.

"We've had a long-term strategy of building a market-leading position in this area and this is one of the final stages," said Bob Holt, chairman and chief executive.

The company has offered 0.115 new shares for each Supporta share. That values Supporta's shares at 31p, a premium of 55 per cent to their closing price before the offer period started on October 29.

Analysts estimate that the domiciliary care market is worth £3bn a year. It provides "essential services", or home visits by care professionals, mostly to the elderly. It is paid for by local authorities but the market is extremely fragmented with a large number of companies providing services. Some contracts attract more than 50 bidders.

"It's consistent with what Mears said they were going to do," said William Shirley, analyst at Liberum Capital. "There were four players on this kind of scale, but I think Supporta was the most digestable of them."

Mr Shirley doubted that any synergies would be significant.

"It's hard to see what synergies are attainable, it doesn't look like they can cut much across the base," he said. "There's also a question mark whether the 11 per cent margin can be sustained".

"It is not necessarily about synergies, though combining two public companies always leads to some," said Mr Holt. "Supporta is an operationally good business which works in different regions to us. In Scotland and London they have a much bigger presence than we do."

The majority of Mears' maintenance and repair operations are funded through tenant rents, which should help the company to weather the negative impact of future public sector cuts.

This week Mears announced that it had won £200m of additional contracts. "We're not worried about the effects of cuts next year," said Mr Holt, who was formerly chairman of Supporta. "We've got lots of contracts.""

[chillwill] 18/12/2009 13:08

Well from a charting point of view its on a short-term down trend after meeting long-term down-trend resistance.

However, a break of the short-term down trend (blue lines) might see a break above the long-term resistance (black lines) - which would be v.good and easily see these mid 300p targets.

Lower red line is support - might prove to be the base from which to establish a new long-term uptrend (if markets allow).

[rivaldo] 18/12/2009 12:45

330p will do for starters:



"Panmure Gordon has....a buy and 330p target for Mears"

[rivaldo] 18/12/2009 08:13

Nicely up on the news on initial reaction.

MER's statement that this acquisition will be earnings-enhancing will have had to be backed up by extensive due diligence and calculations verified by solicitors, accountants etc. That's more than enough for me!

[cwa1] 18/12/2009 07:57

OK. Let's :-)

[essentialinvestor] 18/12/2009 07:51

Yes I read that, and then reached my own conclusion.
Lets have this discussion in 12 months time.

[cwa1] 18/12/2009 07:48

Beat me to the punch there rivaldo, that's the bit that looks most salient to me!

[rivaldo] 18/12/2009 07:44

In case you missed it!

"The Mears Directors believe that the Acquisition will enhance earnings per share after expected cost savings for the year ending 31 December 2010."

[essentialinvestor] 18/12/2009 07:38

So £27 million, plus I assume the £17 approx of debt.

That will do wonders for the Mears share price imo, not holding thankfully.

[rivaldo] 18/12/2009 07:23

Nice agreed acquisition of Supporta today. The key points are that it expands MER's interests in an ever-growing sector, and also in particular that:

"The Mears Directors believe that the Acquisition will enhance earnings per share after expected cost savings for the year ending 31 December 2010."

Here's the RNS:

[jimmerandloz] 17/12/2009 21:50

Hi, thanks for taking time out to provide this information.

I guess the answer is to sit tight, stay patient and take more of a longer term view of the shares.

Thanks again!

[rivaldo] 17/12/2009 09:59

Hi jimmer. The recent news is of course great for MER over the long-term, but the share price is a function of the market, and that in turn reflects demand and supply of shares. Who knows - perhaps a larger shareholder is profit-taking/top-slicing? Today's RNS indicates that Lloyds have been doing exactly that. Perhaps they'll stop selling soon and demand will push the price higher. The markets are a bit stagnant at present - perhaps MER is doing relatively OK in holding present levels and will rise in a pre-Xmas/New Year rally? Then there's the old chestnut about the market-makers (MMs) - perhaps they're holding the price down to enable a buyer to accumulate a holding (it does happen!).

There's always a variety of factors to consider as to why a share price is going up, down or is merely stable within a range.

[jimmerandloz] 15/12/2009 19:26

I'm quite new to the stock market, so please excuse the question if it is an obvious one....

My logic says the release of the news mentioned in previous posts would have had a positive effect on the share price - but the price has hardly moved over the last couple of days.

Is it fair to say that news such as this has a positive effect in the longer term?

[rivaldo] 14/12/2009 14:09

:o))

Nice article here:



"More wins for marvellous Mears
Article Date: Dec 14 2009

Social housing repair-to-domiciliary care star Mears has shrugged off public sector spending cut concerns by clinching at least £200 million worth of new contracts.

Won across its three divisions, the deals are worth an initial £113 million to fully listed Mears, chaired by legendary support services entrepreneur Bob Holt. However, likely extensions should drive the total to 'in excess of £200 million'.

The bulk of the wins are in Mears' social housing division, where it has secured work with the borough councils of Crawley and Colchester, the district councils of Canterbury and Thanet, as well as a five-and-a-half-year gas maintenance services deal worth £12 million with Birmingham City Council.

Meanwhile, Mears' growing care division, benefiting from the local authority trend towards procuring services from fewer, larger market players, has secured business with the local authorities of Newport, Peterborough and Darlington. Elsewhere, its M&E (mechanical and electrical) division has signed contracts valued at £20 million, of which the bulk entails infrastructure and fit out services for the 2012 London Olympics' Athletes Village.

Since unveiling record full year numbers back in March – showing 2008 turnover up 38 per cent to £420 million – Mears has inked deals 'with a potential worth in excess of £650 million' and another record year is shaping up.

Citing its defensive growth prospects, analysts expect pre-tax profits to rise from £20.2 million to £22.4 million this year, on revenues of £471 million, ahead of £26.8 million on £540 million sales by 2010. Up 3p this morning to 273p, the shares currently value Mears at £203 million."

[cwa1] 14/12/2009 07:33

Yawn. More good news :-)

[rivaldo] 14/12/2009 07:17

Terrifc contract news - and more to come given this closing comment?

"I look forward to bringing you further news in the future"

Nice:



"£200 million of new contract wins across all divisions

Mears is pleased to announce the award of new contracts across all three operating divisions.

The awards have an initial value of £113 million and are subject to contract extensions taking the total worth to in excess of £200 million. This takes the aggregate total of new contracts awarded in the nine months since Mears announced its preliminary results to in excess of £550 million with a potential worth in excess of £650 million, subject to contract extensions, which would result in a record year for the Group in terms of both new contract awards and order book.

Social Housing division

We have been awarded new contracts amounting to £93 million that have a potential worth in excess of £180 million subject to contract extensions as set out below:

etc"

"The M&E division has been successful in being awarded works valued at £20 million which are to be delivered in the main in 2010.

£13 million of the £20 million relates to a contract to provide M&E infrastructure and fit out works on the Athletes Village for the 2012 London Games. The Athletes Village will become a mixed community of Social and Part Ownership homes for rent and some private homes for sale post the Olympics and help regenerate the area and leave a long term legacy after 2012. These awards increase the total works on the Village to date to £22 million when added to a previously awarded contract."