Chloride Share Discussion Threads

[wjccghcc] 03/6/2008 09:49

Jimbo, of course if no bid materialises, the share price will fall. Having said that, they are the world #4 in UPS and probably the last chance for the american top 2 (Emerson and Eaton Corp) to make a significant acquisition and acquire the #2 in europe and leader in much of the emerging markets. With the CEO retiring, I'd think the institutional investors will also be willing to accept a takeover at the right price.

I see the analyst consensus has now been upgraded to 11.33p for the current year - with their current momentum it wouldn't surprise me to see them make 12p. That puts a floor under the share price of around 230-240p IMHO. So, downside of 40p if no bid materialises vs upside of 40-80p if we get into a bidding war.

You pays your money and you takes your chances...

[razzzzzer] 03/6/2008 09:11

CHART ALERT!!! CHART BREAK OUT>>>WITH A POSSIBLE BID.

[peaeff] 03/6/2008 09:04

Jimbo55

That's what I kept hoping all the way up from 183p and I only bought in last week after monitoring this for the past 2 months.

It may well be that future bids will be forthcoming, as and when the full impact of the lates figures are studied, so I feel there won't be a retraction just yet, if at all.

Good luck.

[jimbo55] 03/6/2008 08:44

This share is on my radar, but I'm waiting for a share price retraction. I believe the current price relects the mass buy-in based on the now failed Emerson bid, and currently over-values this company as no further takeover bids seem to be coming imminently.

I think this is a great company, but in my view the price at the moment is a tad inflated, so I'm going to take a chance and wait to buy in later.

Would be curious to hear the views on this subject of anybody who currently holds.

[peaeff] 02/6/2008 22:32

WJ

The increase in sales for 2007 has also seen an increase in services and the projected figures for 2008 will no doubt see this being repeated over the course of this year, probably on an escalating scale. Couple that with the aquisitions, whose full value are yet to be felt, and you have a very healthy picture going forward.

When a company begins to grow and expand, as this one undoubtably is, it becomes very difficult for the market to assess the likely potential. That leaves an awful lot of upside in the share price. However, at the present time, some of that upside will be factored into the current share price due to the bid by Emerson, but we have already seen articles suggesting that any further bids will need to be over 300p to have any chance of succeeding.

With management offering the information that current sales and orders are already well ahead of 2007, I feel there is a good possibility that the target price put out by Arbuthnot could well be realised before end of 2008. I shall be interested to see any further broker notes.

Regards

[wjccghcc] 02/6/2008 18:35

I expect Emerson (and the other top UPS companies) have been waiting for the final results before deciding their next move.

Great results and a good presentation on their website - sales to the oil/gas/energy sector was +105% and now makes up 17% of total sales. Other interesting snippets include them being market leader in Australia and Turkey.

The only fly in the ointment is the Americas where sales growth was only +4% but since that's only 10% of total sales, it's not that a big deal. Also, their main competitors are strong in the US so would only be buying them for their European/MidEast/Far East strength.

[peaeff] 02/6/2008 16:21

Good figures, very good prospects going forward and an upgrade from Arbuthnot Securities from neutral to 'buy' with a 350p target.

Nothing in the Annual report about the failed offer but I don't feel it's the last we shall hear on the subject. Lets hope other analysts offer their support.

Regards

[peaeff] 30/5/2008 10:17

Morning all

Having made a very big mistake in not buying in around the 180p mark, and thereafter kidding myself that the price will eventually drop, I have now bought in just in time for the results on Monday.

I sincerely hope my presence will not have an adverse effect on the share price going forward.

Good luck all.

Regards PF

[wjccghcc] 28/5/2008 17:14

All grist for the mill:

Power Set To Return After UK Blackouts
SkyNews
By Sky News SkyNews - 1 hour 38 minutes ago

Electricity supplies should return to normal today after the countrywide blackouts, the National Grid has said.

Hundreds of thousands of homes and businesses across London, Cheshire, Merseyside and East Anglia were affected between 11am and 1pm on Tuesday.

The blackouts happened when the Sizewell B nuclear power station in Suffolk and the Longanett coal-fired power station in Fife both went off-line within several minutes of each other.

In total, nine generating units across the country became unavailable.

Stuart Larque, spokesman for the National Grid, said: "We think it will be a case of business as usual.

"We have a very robust system in the UK. It rarely fails and that's why everybody is talking about it so much."

The blackouts were caused by the opposite of a power surge as the National Grid deactivated local stations to maintain the required 50hz frequency.

When demand is greater than generation, the system fails.

The Government has come under pressure from the largest independent energy consultancy, McKinnon Clarke, to build new power stations or face further power cuts.

David Hunter, energy analyst at McKinnon Clarke, said: "The Government's inability to make long-term energy security decisions over the last decade is coming home to roost.

"Since the 'dash for gas' in the 1990s, the lack of political will to make tough decisions has left Britain short of power."

[rampmeister] 14/5/2008 23:30

Setting aside bid for the moment, my reckoning was share price would probably rise to around 230p to 240p as we approach 2nd June when stellar results will be announced along with further guidance on new year starting 1/4. The bid premium from this point is neglible, Emerson will have to get real if they want this company.

RM

[raggedglory] 14/5/2008 19:36

Excellent debate, people. I like this kind of dilemma!

[rampmeister] 14/5/2008 09:26

Given CHLD strong growth and domination in significant geographical regions can Emerson afford not to take them out? 255p is opening shot imv.

RM

[phillis] 14/5/2008 08:14

Wonder whether it was Emmerson or Chloride themselves who tipped off the Sunday Telegraph

[forwood] 14/5/2008 04:09

508 in your dreams. 'Recent deals' go back to 2006 - a long time ago in stock time. If they are serious then they may stump up a bit more but round the 300 mark would be IMHO tops. Still, that'd be good from here.

[rampmeister] 13/5/2008 19:50

No holding for more. I reckon there is a lot more upside than down with results adding to the mix shortly. Emerson have been sniffing around for a while - do you seriously think that 255p will be their final offer?
ABN Amro estimates are based on valuation of recent deals in the sector. 508p.............bring it on.

RM

[forwood] 13/5/2008 19:27

Despite all that, the price went down, didn't it? Hope you sold near the top and bought back in near the bottom.

FWIW, I expect it will climb higher but not exceed 280 until there's further news. If none is forthcoming, it will of course drift way back - or plunge if emerson say they're not interested above 255.

What the analysts are not factoring in is that the world has changed a bit since those last takeovers. Overpaying is not the name of the game. And I don't suppose there's many with enough cash on hand to make an offer with going to the banks. You can imagine the scene when they say: please can I have half a £billion to buy this niche company at 2.5 times sales...

[rampmeister] 13/5/2008 09:15

From DT - Sue Cox ABN Amro Analyst says.....based on recent deals in the sector CHLD could be worth anywhere between 288p and 508p and anyone wanting to bid for this jewel of a company will have to pay up.
Sound good to me.

RM

[wjccghcc] 13/5/2008 08:17

From the FT - on sector comparables, the analysts say the price should start with a "3".


Chloride rises on hopes of higher offers

By Philip Stafford

Published: May 13 2008 03:00 | Last updated: May 13 2008 03:00

Shares in Chloride soared by more than a third on the prospect of attracting fresh offers, after the power protection group said it had rejected a £657m approach from Emerson Electric Company, its larger US rival.

The UK company, the world's fourth-largest uninterrupted power supply specialist, yesterday said the 255p a share cash approach from Emerson, the world number one, "materially" undervalued the company and its prospects.

Chloride's share price, which was already trading near an all-time high, climbed 72p to 280p on hopes that Emerson would return with a higher offer or that an alternative bidder - most likely Eaton of the US or France's Schneider - could emerge.

Chloride's closing price gave it a market capitalisation of £709m.

Chris Dyett, an analyst at Investec, pointed out that the nearest comparable deal was Schneider Electric's $6.1bn acquisition of American Power Conversion Corp in 2006, which was priced on 2.5 times sales or a prospective p/e ratio of 36 times.

"The sales multiple would suggest a price of 300p and the p/e [would suggest] 270p," he said. "Either way it's way above 255p. The reality is that the bidding should start with a 3 at the front," he added.

Emerson, which was forced to reveal its hand by the Takeover Panel, said there could "be no certainty that an offer would be forthcoming".

The two companies said they had been talking about a combination since March 18, but Chloride has since upgraded its earnings forecasts and the shares are up more than 80 per cent since mid-March, undermining the basis for a deal agreement.

Chloride is expecting another year of record sales as companies - from investment banks to oil rigs - rely on a small clutch of specialists to safeguard a growing reliance on technology that demands constant and reliable power supplies.

Frost & Sullivan, the consultancy, estimates that the overall market will expand at a compound annual growth rate of 10 per cent over the next five years.

Chloride estimates sales for this year should increase about 30 per cent. It also has deeper exposure to the fast-growing Asian market, particularly India, than rivals.

[wjccghcc] 13/5/2008 08:01

forwood, 9.14p was for the year already finished which they said they'd exceed. Current year forecast is 11.11p but it's been moving up (and they smashed this year's original forecasts).

Yes, 280-300p is not cheap but that's the price a bidder will need to pay to get control and as I said, these are the only pureplay european leading power assurance company available. Would one of the global big 3 take a 1 year earnings dilution to boost their strategic position? Very possibly.

I've held scarce takeover targets before - oil services, IT datacentres and that's happened with all of them. Anyway, the next few weeks will tell - Emerson's statement was certainly leaving the door open for a further bid.

[forwood] 13/5/2008 00:55

Hi tonysss - still trading but mainly doing the miners. Occasionally something like this attracts

[forwood] 13/5/2008 00:52

WJCC

Forecast earnings are now 9.14 and don't hit 12.83p a share until year end 2010 according to consensus forecasts on Digital Look, at which point it would have a PE of 21.8.

That's the same as mining growth star RIO now, and RIO is a confirmed takeover target! CHLD's EPS then would still only be 4.6% compared to current sector average of 46%!! That's quite a premium....

Last two broker views here were:

28-Mar-08 ABN Amro Buy 185.00p - Reiteration
28-Mar-08 Cazenove Outperform 185.00p - Reiteration

Already nearly a £1 above those valuations, 255 represents a 38% premium. Emerson would have to be pretty desperate and cash foolish to pay much more than that. I don't suppose the credit ratings companies, which cut them to Stable today would be too happy either. They've just committed to spend $4.5 billion on a share buyback programme!

Bird in hand looking darn sight better than 2 in the bush methinks.

[call-logger] 12/5/2008 20:57

Emerson Electric doesn't look too bad itself.

[mr.oz] 12/5/2008 20:26

WJ.. that scarcity value in the sector has me scratching where to look next ... have you any thoughts.
( I have CHNS as a smaller version, but they haven't the expertise (yet) to move into such business critical support on a large scale, IMO. )