Styles & Wood: management make £81m bid to go private

The top two who head up fit-out specialist Styles & Wood want to buy the company that they floated on the Stock Exchange two years ago and take it private again.

Chairman Gerard Quiligotti and chief executive Neil Davies have put in a bid for S&W worth £81m.

When the pair floated S&W in December 2006, shares traded at 150p.

This represented a 14-times multiple of the profit that independent city stockbrokers anticipated that the group would make that year.

Also, the 14-times multiple was similar to that used to value other companies in the Stock Exchange’s support services sector at that time.

But in recent months S&W’s share price has been on the slide, touching 90p at the end of March, then slipping even lower to just 78p at the start of this week.

The Quiligotti-Davies bid of 125p stands substantially higher than the market price prior to the announcement….. but even 125p is no more than an 8-times multiple of the profit that city analysts anticipate S&W will make during 2008, the current financial year.

S&W’s market share price has suffered more than other groups listed in the support sector because of its exposure to the retail sector, the general view being that a fall in consumer confidence will result in a postponement of retailers’ planned upgrades.

News of the cash proposal was announced by Jim Martin and Robert Hough, S&W’s independent directors.

Their announcement on the Stock Exchange was made without the consent of the management team.

In a separate trading update statement, announced at the same time, the group said:

“In the first quarter of 2008 we have seen a tough market environment for our premier league UK-based customers.

“The team is responding well and the board is pleased to report that the secured orderbook as at 31 March 2008 has grown satisfactorily, with over 60% of the market expectation for revenue in 2008 secured.”

Having started the year with an opening orderbook of £140m, this figure had risen at the start of the second quarter of the year to £201m.