Kentz Share Discussion Threads

[adamb1978] 28/8/2013 14:44

Spob - timetables can get extended but 'a few months' as you stated above never ever happens. The Panel wouldn't allow it

[ygor706] 28/8/2013 13:34

Good post Jeffian and not far from the truth I think. There are just too many institutions taking chunky 1.5% stakes in the company for this to be over yet. To my mind yesterday's announcement by Kentz was a damp squib and perhaps indicative that they won't put up too much of a fight if a half decent figure gets put on the table. Most of the newspaper comment also appears more interested in generating heat than light at the moment (I thought that the Tempus comments were particularly weak) but I'm expecting a return from this level - although not as much as some might wish.

[spob] 28/8/2013 11:54

yes it can

extentions can be granted

and if a new bidder emerges on sept 16th or after a bid by Amec then timetables get changed

[adamb1978] 28/8/2013 10:44

Spob - not with the UK takecode it cant

[spob] 28/8/2013 01:14

This process has only just begun. This could run for a few months yet.

[spob] 28/8/2013 01:11

Other bidders could yet show their hand. But it is way too early for that. To do so now would be stoopid. A bit like Ebay bidders not waiting until the last possible moment to bid. Bidding early just pushes up the ultimate buying price.

[jeffian] 28/8/2013 00:19

I always think the clue's in the unattributed press coverage. Clearly Amec began sounding out KENZ a couple of months ago at a lowball figure. When they feel they're getting nowhere, an unattributed 'rumour' hits the press about a potential bid. Assuming this comes from the bidder's side, the idea is to put it into the public domain and see the reaction. Once the niceties of the RNS statements have been completed, a story hits the press from unattributed "City sources" saying that the bid needs to be at 700p to succeed. This sounds very much like a target set by management. After a bit of to-ing and fro-ing, unnamed "major institutional holders" let it be known that they could be tempted around 650p. So we're 'in play'; the market is not attaching a premium to the initial bid suggesting that they're not anticipating a hotly contested battle; and some major shareholders have shown a willingness to consider a bid at a level. It sounds to me as if the bid is going to have to be raised slightly to succeed, but maybe not as much as we would all like.

[rhodmoney] 27/8/2013 21:53

A formal offer of 630p from Amec would test the water.

[adamb1978] 27/8/2013 21:30

I was thinking before that 650p might be a successful offer price but really now think that it needs to be 700p minimum.

You have to remember that assuming the offer is announced in mid Sept, then it wont complete until November which means that 2013 is in the bag and you need to be looking forward to 2014.

Based on my forecasts, 700p gets the company on a PE of about 14.4x 2013 PE (excl cash) and only 12.7x 2014 PE (excl cash). I think selling the company on a lower multiple than that is giving value away

[spob] 27/8/2013 17:44

Thanks Haywards

[haywards26] 27/8/2013 12:54

Results value Kentz at 700p - analyst

By Julie Fisher | Tue, 27th August 2013 - 10:36

Engineering and construction group Kentz (KENZ) said it remained "confident in its business model" as it reported strong first-half results days after rejecting two takeover bids.

The oil-services firm saw pre-tax profits rise 3% to $52.7 million (£33.8 million) in the six months to 30 June, and raised its dividend by 20% to 6.6 cents per share.

"Across the global engineering and construction space, many companies are indicating a more cautious outlook for the future than previously observed," the company said.

"However, the markets in which Kentz operates continue to be busy and the first half of 2013 has seen one of the most active periods of bidding ever experienced by Kentz, which has continued into the second half of the year."

Kentz submitted $4.5 billion in bids in the second quarter, with bids increasing across all business units and regions.

It maintained a win rate of one in three bids, swelling its pipeline of opportunities by 14% in the first half.

On 19 August, Kentz announced it had rejected an offer of between 565p and 580p per share from rival AMEC (AMEC), as well as a lower offer from German engineer M + W Group, because these offers undervalued the company.

It will remain in an offer period until 16 September.

Analyst view

VSA Capital analyst Malcolm Graham-Wood said Kentz was "attractive as a takeover target" and reiterated the company's opinion that the offers made earlier in August had undervalued it.

"Certainly the numbers confirm that the AMEC bid is far too low," he commented.

"There was speculation in the press over the weekend that some shareholders would start to entertain a bid of over 650p, we still feel that this would be too low and bids over 700p are more reflective of a realistic offer."

[wylecoyote] 27/8/2013 12:50

ohisay, I like your probability analysis, a bit of guesswork, but allows you to make a back of cigs calculation and explains why a lot of ppl were selling at 590.0p. Something for me to think about going forward, especially where the scenario changes.

[ohisay] 27/8/2013 12:32

Wyle - As usual in these situations always worthwhile doing a % likely outturn on where the share price is going to be over the next month or so.
I'd say .

30% chance another bid from Amec at 630p
20% chance another bid from Amec at 650p
50% no more bids - price drops to 500p ish
Wt average 569p

So price at 561p just about where it should be.

I can't see a bid at 700p this year - maybe next .

[westcountryboy] 27/8/2013 12:31

jeffian

good spot, thanks

[a0148009] 27/8/2013 12:15

Kentz Presentation.

Kicks off with a strong rebuttal in as much as a formal offer has not yet been made.



CEO interview with CNBC UK



AO

[sheyac] 27/8/2013 12:06

What about that talk over the weekend at 650p? Does that signify that a bidder has unofficially proposed that?
What is the regulation behind negotiations? Now that it's under a bid proposal and we keep getting 8.3/8.5, does that mean any proposal's are reported straight away? I mean we only found out about the Amec approach a couple months after.

[wylecoyote] 27/8/2013 11:54

The market appears to be pricing in no further bids...

[jeffian] 27/8/2013 10:37

Well spotted, pyemckay. I'd missed that.

westcountryboy,

Well cash is cash ("Kentz own cash consisting of gross cash (US$219.3m) less borrowings (US$5.6m) and client advances (US$34.5m) amounted to US$179.2m at period end."), though I accept that one needs to look at liabilities on the balance sheet as well. In this case, it seems that interest on the cashpile is offset by the cost of leasing capital equipment -

"Net finance expense for the period amounts to US$0.2m, down US$0.09m from the 2012 figure. The decrease is attributable to reduction in interest costs as external financing within the Group was at a minimal level. The borrowings relate primarily to lease asset finance for the purchase of fixed assets. Deposit interest for the period amounted to US$1.2m, a reduction of US$0.2m on the 1H 2012 level."

[westcountryboy] 27/8/2013 10:10

The interim results cashflow statement shows interest paid 695 - interest received 213 = net payment 482. So I wouldn't get too excited over the cash pile!

[pyemckay] 27/8/2013 10:03

as per the statment. they are considering a return of capital to investors if they cant find a better use of the cash. There is 120p on the balance sheet so a special divi of 70-90p would seem reasonable. This might scupper the bid so be careful guys. Kentz are defending themselves! interesting time for holders.