Mears Share Discussion Threads

[geovest] 08/1/2010 13:36

I think it is most likely that they realised they would not be able to raise the financing for a cash offer.

[iii spy] 08/1/2010 12:49

Possibly concerned over the non-core business at SOR and cannot line up an exit for it in time. I am sure BH has done his homework and has a safe haven for that part of the business to right off against the new debt.

[cwa1] 08/1/2010 11:58

Nice ferreting as ever riv. Thanks.

That would be my only concern that they have found something in their due diligence that they didn't like-but I guess Mears should be in an excellent position to know what they are buying and think they are entitled to our trust on that one.

[rivaldo] 08/1/2010 09:40

:o))

Nice article in today's FT, emphasising that Supporta's major shareholder considers MER's offer price to be a bargain and that Bob Holt knows SOR's business well as its former Chairman....



"Allied withdraws its cash offer for Supporta
By Hannah Kuchler

Published: January 7 2010 23:05 | Last updated: January 7 2010 23:05

Allied Healthcare has withdrawn its indicative cash offer for domiciliary care provider Supporta, leaving the way clear for Mears to buy the company.

Allied gave no reason for the withdrawal, and the Supporta board has already recommended Mears' £27.2m all-share offer.

Romac Investments, which holds 28.2 per cent of Supporta through its Gingko Investments subsidiary, had urged other shareholders to wait for a cash offer before accepting the Mears' bid.

Nigel Welby, a leading shareholder in Romac Investments, said: "We're naturally disappointed that Allied has decided to walk away as we feel the Mears offer fundamentally undervalues the business. We will have to sit down in the morning and consider what to do – we have a material stake and will influence the outcome."

Supporta shares fell 4p to 30p.

Karl Green, an analyst at Altium Securities, said: "We don't know whether Allied Healthcare just didn't feel able to exceed Mears' offer or whether they found something in the due diligence that they didn't like.

But the Mears chief executive Bob Holt was chairman of Supporta, and Mears is in domiciliary care too, so he knows the company." The domiciliary care market is worth about £3bn a year."

[cwa1] 08/1/2010 09:09

Excellent update. Happy with that going forward. I'm assuming that the price will down by the end of the day as per tho ;-)

[geovest] 08/1/2010 08:13

I like the wording "the Group is currently at advanced stages of negotiating further significant opportunities." It means they are already past the tender stage and are now negotiating final term.

[rivaldo] 08/1/2010 07:17

Excellent trading update this morning - 2009 results will be good, order book is up to £1.8 billion from £1.7 billion, secured 2010 revenues up to 75% from 72%...

....and further "significant opportunities" to be announced.

Expectations for 25p-26p EPS this year should be increased with the Supporta acquisition, but a re-rating to 330p or so should be in order to start with imo:

[rivaldo] 07/1/2010 15:43

:o)) Maybe they just couldn't finance the deal themselves in time to top MER's offer, who knows? It has to be good news for MER that they don't have to raise their offer or engage lawyers and advisers costing £m's for evermore....

[cwa1] 07/1/2010 15:14

No intention to make an offer for Supporta plc ("Supporta")

On 23 December 2009, Allied Healthcare International Inc. ("Allied") announced,
in accordance with Rule 2.4 of the City Code on Takeovers and Mergers (the
"Code"), that it had submitted an indicative cash offer for the entire issued
share capital of Supporta, which was subject to, amongst other things, due
diligence.
Following a period of due diligence, Allied has decided to terminate discussions
with Supporta. Allied therefore confirms, in accordance with Rule 2.8 of the
Code, that it has no current intention to make an offer for Supporta.

Wonder what they found.................?

[jimmerandloz] 06/1/2010 16:57

It's nice to see the shares on a slow upward trend at last!

[rivaldo] 06/1/2010 15:53

Popping upwards.

[iii spy] 04/1/2010 12:54

Any idea what this level might be? you seem to be well informed.

[phillis] 04/1/2010 12:35

the price is what somebody is prepared to pay. Mears have another level up their sleeve

[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!