Styles & Wood shares plummet 60% after mbo blown out
09:00 23 May 2008
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Shares in Styles & Wood plunged massively this morning on news that a management buy-out bid has been blown out of the water, the reason being a sudden decline in the fit-out specialist group’s prospects.
The effect of the news on S&W's share price was dramatic: after trading steadily at 110p for the past 18 days, shares opened this morning at a value of just 40p.
On 16 April chairman Gerard Quiligotti and chief executive Neil Davies revealed that they had put in a 125p-a-share offer, valuing S&W at £81m.
When the pair floated S&W in December 2006, shares opened at 150p. In recent months they had slipped backwards, hitting 80p on the day when the buy-out offer was unveiled.
The offer, pitched at 125p, represented a 56% premium to the market price when it was announced.
But marked conditions have changed rapidly for the worse, hence the re-think.
In a trading update this morning, S&W offered a reminder that the secured orderbook at 31 March was in line with expectations, with over 60% of anticipated turnover for 2008 already signed up.
But less than two months since that time, the latest insight from S&W says that the orderbook has “fallen behind expectations, chiefly through order deferrals” and also that there is pressure on profit margins across the existing framework agreements.
“It is evident that our expectations for the half-year ending 30 June will not be reached,” says the group.
Costs are being trimmed and the hope is that in the full year to 31 December 2008, financial performance will mirror that of the previous year.
The statement concludes: “Given the change in market conditions, the executive directors have concluded that it is inappropriate to pursue their indicative offer. All discussions have ceased.”