Private equity suitors are circling troubled banknote maker De La Rue as they prepare to pick off its more promising businesses.
Shares in De La Rue, which lost the prestigious contract to print Britain’s post-Brexit blue passport last year, tumbled last month after the firm released the latest in a string of profit warnings.
Predators have now seized on this opportunity to look at snapping up De La Rue’s product authentication arm for a knock-down price.
Shares in De La Rue, which lost the prestigious contract to print Britain’s post-Brexit blue passport last year, tumbled last month after the firm released its latest profit warnings
Three private equity firms –one headquartered in the UK and two US firms with London offices – are weighing up a bid for the division.
De La Rue’s product authentication unit creates tracking software and physical labels to help prevent trade in fraudulent items, from cigarettes to official football shirts.
It has previously worked for major companies such as Microsoft, where it made labels for Microsoft’s products which included a hologram and hidden security features to verify their legitimacy.
But if the product authentication arm – on which De La Rue is pinning its hopes for growth – is sold, the 198-year-old company could be left floundering.
Shares in De La Rue, once a stalwart of the FTSE 250 index, have already plunged almost 75 per cent since rumours emerged in March 2018 that the company had lost the British passport contract to a French rival.
In the year to March 2019, De La Rue made revenues of £516.6million. Of this, £39.3million came from the product authentication business.
That unit also contributed £5.7million of profit to De Le Rue’s £60million total – though analysts expect product authentication’s profits to increase to between £18.7million and £20.7million in this current financial year.
That could mean the product authentication business is worth up to £200million, on one analyst’s reckoning.
But De La Rue’s troubles are weighing down its shares so much that currently the whole company is valued at just over £160million.
Talks within the private equity firms regarding a bid for De La Rue’s product authentication arm are currently at an early stage, the Mail understands.
A De La Rue spokesman declined to comment on ‘rumours and speculation’.