LON:WTM | Waterman Group - WTM - Approved Cash Offer

9th May '17 by back2value

18 comments 5895 reads

According to an RNS this morning, the board of Waterman Group (WTM) have agreed an all-cash takeover bid from a Japanese civil engineering group, CTI, at 140p per share, a premium of over 83 percent to the closing price of 76.50p yesterday.

This outcome is not entirely surprising as I had always thought WTM were one of those specialist engineering consultancies which would appeal to a bigger buyer. Including dividends, assuming this takeover proceeds, I will have made a return of just under 40% in 15 months as a holder - no complaints here.

B2V

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Back2value

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In terms of my active investments, I look for shares with attractive fundamentals and where changes in net asset value have the potential to cause upward re-ratings. I think technical analysis is meaningless, and I am a convert to Stockranks as a starting point for further research into specific investments. more »

18 comments

JamesrWilson1989

9th May '17

This Is the 2nd time ive benefitted from construction consultants being taking over as I was also involved with Sweett Group. What others are listed?

smatthews1

9th May '17

Currently a holder and obviously happy with the outcome. now I am faced with a problem (good one) which i have never come across before.

I have not been in this situation before so does this mean the company will get taken off the market and shareholders will receive the offer price in cash?

Regards
Sean

stepone

9th May '17

Yes, assuming shareholders agree to the takeover. A timetable will be published.

Rusty2

9th May '17

I don't think shareholder approval will be a issue as the premium is 80%.

Some investors sell out as soon as takeover announced because the upside is limited (maybe rival bid) and if takeover falls through then shares will plummet. So they take the money and reinvest. Also you will have to wait months for the money, can be nervous wait for a few % gain.

smatthews1

9th May '17

Thats very helpful to know, thanks Herbie.

jashunter

9th May '17

A lot of buys today now at 139+. Does that mean investors are expecting a higher counter bid?

gus 1065

9th May '17

Morning Jas.

Not always easy to read the entrails on what the market is thinking. It could be that there is hope for a higher bid but equally might just be CTI or their agents building up their stake in the open market at or around the 140p bid price. Given the 80%+ premium, the offer looks attractive but given Waterman (LON:WTM) 's low market cap of just over £40m a higher offer would be small change for a buyer looking to leverage a perceived strategic position that Waterman (LON:WTM) might have in its particular markets.

IMO, a current market price of c.139p suggests that it is more hope than expectation of a higher bid but if you recall the Lavendon (LON:LVD) acquisition last year two rival bidders took the price up from an initial 205p bid to about 260p so the upside of some competition might be worth a small punt/holding on to your shares. From what I can see in the RNS there seems a good chance of the current bid going through (no regulatory hurdles, no dominant market position, CTI seems substantial and well funded etc.) if no one else joins the party so not too much risk that the base offer price will fall away IMO.

I have a reasonable holding (about 1% of my portfolio) and intend to hold on for the time being.

Best,

Gus.

jashunter

9th May '17

Thanks for your thoughts on WTM. Much appreciated. It represents 6.5% of my portfolio. I'm pleased to see you share my view that likely to go through and, as such, will continue to hold till the end.

regards

jas

garbetklb

9th May '17

At 6.5% of my portfolio, I'd be very tempted to lock in part of the gain - just in case it doesn't happen. I'd be tempted to sell 1/2 to 2/3 of my holding if I could get around 139p.

Especially if there is anything out there that looks interesting. But it's clearly an individual decision!

LittonOwl

9th May '17

Able to sell @ 139.52p this morning, so decided to give up the 0.48p for the peace of mind. Another excellent share bought primarily thanks to Stockopedia's SR some 18m ago for approx. 55% gain all in.

langley59

10th May '17

Just looked at this morning's trades in Waterman (LON:WTM) and they all seem to be buys with a large one @ 140p. Is the market expecting a bidding war I wonder?

Andrew niven

10th May '17

Having bought at around 80p very very happy to have taken a nice profit yesterday

gus 1065

10th May '17

RNS from CTI stating they've been buying another 1m plus shares in the market at up to 140p in addition to the irrevocable commitments they've already secured taking them above the 30% threshhold.

http://www.investegate.co.uk/cti-engineering-co-/wtm/recommended-mandatory-offer-for-waterman-group-plc/201705101205547455E/?fe=1&utm_source=FE%20Investegate%20Alerts&utm_medium=Email&utm_content=Announcement%20Alert%20Mail&utm_campaign=CTI%20Engineering%20Co.%20Alert

I suspect this represents much of the recent market activity at or around the bid price although can't rule out other speculative activity in the background as well. I would only start to get excited if you see shares trading hands above the 140p level on the grounds that if CTI were doing this they would be obliged to up their offer under takeover rules (implying another party is perhaps showing an interest).

Gus.

langley59

10th May '17

Yes now seen that, thank you.

drvodkaquickstep

10th May '17

http://www.stockopedia.com/content/how-contrarian-investors-cashed-in-on-the-hidden-appeal-of-waterman-183159/

langley59

11th May '17

Some small trades appear to have gone through @141.50 this morning

back2value

11th May '17

That doesn't make any sense, unless there's a better bid in the offing. Someone educate me on this.

B2V

Rusty2

11th May '17

They were small trades, less than 500 shares so spread will be wide, most trades are at 140p.

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