TIDMSNR
RNS Number : 7656C
Senior PLC
22 June 2021
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH
JURISDICTION.
THIS IS AN ANNOUNCEMENT FALLING UNDER RULE 2.4 OF THE CITY CODE
ON TAKEOVERS AND MERGERS (THE "CODE") AND DOES NOT CONSTITUTE AN
ANNOUNCEMENT OF A FIRM INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF
THE CODE. THERE CAN BE NO CERTAINTY THAT ANY OFFER WILL BE
MADE.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE
22 June 2021
Rejection of the Lone Star Proposal - Clarifications
Senior plc ("the Company") notes its announcement released on 22
June 2021 concerning its Rejection of the Lone Star Proposal. The
Company further notes the following three clarifications:
- there was a reference to pre IFRS 16 in Section 3 of the
Announcement. The reference should have been to post IFRS
16
- the sub scale composites businesses disposed of under Senior's
"Prune to Grow" strategy were in Wichita, U.S. and the
U.K.
- in Note 19 in the Appendix to the announcement, the net
debt of GBP221m is as at the end of March 2021
An updated Announcement is set out below in its entirety.
Enquiries:
Senior plc
David Squires - Group Chief Executive Tel: +44 (0)1923
Bindi Foyle - Group Finance Director 775547
Finsbury Glover Hering
Communications adviser to Senior Tel: +44 (0)207 251
James Murgatroyd / Richard Webster-Smith 3801
Rule 26.1 Disclosure
In accordance with Rule 26.1 of the Code, a copy of this
announcement will be available at
https://www.seniorplc.com/investors/rns-announcements.aspx , by no
later than 12 noon (London time) on 23 June 2021. The content of
the website referred to in this announcement is not incorporated
into and does not form part of this announcement.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH
JURISDICTION.
THIS IS AN ANNOUNCEMENT FALLING UNDER RULE 2.4 OF THE CITY CODE
ON TAKEOVERS AND MERGERS (THE "CODE") AND DOES NOT CONSTITUTE AN
ANNOUNCEMENT OF A FIRM INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF
THE CODE. THERE CAN BE NO CERTAINTY THAT ANY OFFER WILL BE
MADE.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE
22 June 2021
Senior plc
Rejection of Final Conditional Proposal from Lone Star
The Board of Senior plc ("Senior" or the "Company") confirms
that on 21 June 2021 it received a final conditional proposal from
LSF XI Investments, LLC, a company advised by Lone Star Global
Acquisitions, Ltd ("Lone Star") in relation to a possible cash
offer for Senior at 200 pence per Senior share (the "Final
Conditional Proposal"). This Final Conditional Proposal remains
subject to a number of pre-conditions, including completion of a
detailed due diligence exercise on terms satisfactory to Lone Star
and securing committed debt financing.
The Board of Senior has now received five conditional proposals
from Lone Star. On receipt of the first conditional proposal on 27
April 2021, the Board of Senior, together with its advisers,
assessed the fundamental value of the Company taking into account
the anticipated medium-term recovery in Senior's end-markets and
the likely value created through the continued delivery of its
strategy. Having concluded its evaluation, on 28 April 2021 the
Board rejected the first proposal from Lone Star, at 150 pence per
Senior share.
Subsequently, Senior received three further conditional
proposals. Over this period, the Board of Senior, together with its
advisers, conducted a thorough review to assess the fundamental
value of Senior as well as the likely value to be created by the
continued delivery of its strategy. In addition, the Board
evaluated the share price levels at which it believed its
shareholders would consider a proposal to be attractive. This
valuation framework has continued to be tested and revised at every
stage by the Board and its advisers, including taking into account
shareholder feedback since the approach from Lone Star became
public. As a result of this process, the Board rejected each of the
three subsequent proposals from Lone Star, on the same basis.
The Board met again on 21 June 2021 to consider the Final
Conditional Proposal. Following careful consideration, together
with its advisers, the Board has unanimously rejected this fifth
and final proposal, which represents only an 8% increase to Lone
Star's previously rejected conditional proposal of 185 pence for
Senior share, and continues to fundamentally undervalue Senior and
its future prospects.
In their letter setting out the Final Conditional Proposal, Lone
Star stated that their "plan is underpinned by our continued belief
that with our experience and financial support, we can be a strong
partner for the Company and can assist the management team in
delivering on its strategic plan during the coming years of market
recovery and in further developing the Company's business
portfolio." The Board believes it has adequate resources in order
to deliver on its strategy.
The Board clearly understands its fiduciary responsibilities
and, in that context, would be willing to engage with Lone Star, or
other potential offerors, at a price which reflects Senior's
fundamental value. However, the Board notes that this latest
conditional proposal has been declared final and is therefore not
capable of being increased, unless there is an announcement of an
offer or possible offer for Senior from a third-party offeror or
potential offeror. Given this, there is no basis for engagement
with Lone Star at this time. The Board is confident that continuing
to focus on its strategy will deliver significantly more value to
shareholders over the medium-term.
In the Board's assessment, the Final Conditional Proposal:
1 Is highly opportunistic, does not articulate a clear or
a different strategy, and comes at a low point when core
markets remain temporarily impacted by Covid-19 fall out
2 Does not reflect the anticipated end-market recovery across
core Civil Aerospace, Land Vehicle and Power & Energy
markets
3 Fails to recognise Senior's clear strategy to maximise
shareholder value and grow the business by focusing on
IP-rich fluid conveyance and thermal management technology
4 Still fundamentally undervalues Senior and its future
prospects
Ian King, Chairman of Senior, said:
"We view this final conditional proposal as highly opportunistic
given the timing and the relative share price weakness, coming at a
point where our end-markets are showing signs of recovery. Senior
has been resilient through the pandemic and is well-positioned to
emerge strongly as the recovery continues. The proposal still
fundamentally undervalues Senior. The Board believes we have a
clear strategy that will maximise value for shareholders over the
medium-term and accordingly, the Board is not able to recommend a
sale of the business at 200p per share."
1. The Final Conditional Proposal is highly opportunistic, does
not articulate a clear or a different strategy, and comes at a low
point when core markets remain temporarily impacted by Covid-19
fall out
Senior has been impacted by extraordinary events since early
2020, including the production stoppage of 737 MAX following its
earlier grounding, the Coronavirus pandemic, and the significant
decline in oil price.
As a result of these short-term headwinds, our profitability is
temporarily well below historical levels and the 'perfect storm' of
uncertainty has weighed heavily upon our share price, which we
believe does not fully reflect the medium-term potential of the
business.
The Group has been resilient through the pandemic and is
well-positioned for the future. Senior has been proactive and
delivered a strong cash performance in a period impacted by
exogenous events.
Our restructuring programme, which was initiated in 2019 and
further adapted through the course of 2020, is effective and
delivering its expected benefits, having delivered cumulative
savings of GBP36m to the end of 2020. We are expecting these to
increase to GBP45m by the end of 2021 and GBP50m annualised savings
from 2022(1) .
The decisive actions which have been taken to insulate the
business in 2020, including headcount reduction and business
closures, mean that we are now an even leaner and more efficient
business.
The Group balance sheet remains robust. We have maintained
strong liquidity and stable finance arrangements and over the past
year we have managed to reduce our net debt (pre IFRS 16 lease
capitalisation) from GBP145.9m in Dec-19 to GBP80.4m in Dec-20 on a
proforma basis(2) .
We have continued to advance our "Prune to Grow" strategy,
divesting or closing non-core or performance-challenged assets, and
we remain a Group with intrinsically strong cash generation, with
businesses capitalised and prepared for future recovery and
growth.
2. The Final Conditional Proposal does not reflect the
anticipated end-market recovery across our core Civil Aerospace,
Land Vehicle and Power & Energy markets
Senior's end-markets in civil aerospace, defence, land vehicle
and power & energy are all showing clear signs of recovery from
historic lows and Senior remains confident about its prospects over
the medium-term.
Senior's Aerospace division is well-positioned to benefit from
the recovery in Aerospace markets:
-- Senior has a diversified product portfolio in the aerospace
and defence sector, including attractive positions across
the next generation single aisle aircraft platforms
-- Short-haul domestic travel is recovering first as vaccine
rollout takes effect; evidence from China and the US makes
clear that there is an appetite for travel
-- Air traffic recovery is underway as travel restrictions
continue to ease globally and the vaccine rollout gathers
pace. IATA forecast world passengers flows to return to
2019 levels by the end of 2022, and to reach 105% of 2019
levels by 2023(3)
-- Airbus and Boeing have both confirmed plans to ramp up
single aisle production in the near-term for the 737MAX
and the A320 platforms:
- Airbus confirmed an average A320 Family production
rate of 45 aircraft per month in Q4 2021 and called
on suppliers to prepare for a rate of 64 by 2023(4)
.
- Boeing announced they expect to increase production
on the 737 MAX from the current low levels to 31 per
month in early 2022 with further gradual increases
to correspond with market demand(5) .
-- Defence markets remain robust and supported by US defence
spending(6)
Recovery is also underway across our Flexonics end-markets:
-- There are clear signs that a recovery is underway in our
land vehicle end-markets with independent market forecasts
estimating a strong recovery in North American and European
truck production during 2021-22
- ACT Research is forecasting a 43% increase in North
American heavy-duty truck production in 2021, and further
growth of 18% in 2022. The North American medium-duty
diesel truck market is also forecast to increase by
12% in 2021(7)
- IHS Markit Inc. forecasts that European truck production
will grow by 19% in 2021 and a further 7% in 2022(8)
-- Oil price increases, coupled with recovering economies,
are expected to support the return to growth in oil and
gas markets from the end of 2021(9)
3. The Final Conditional Proposal fails to recognise Senior's
clear strategy to maximise shareholder value and grow the business
by focusing on IP-rich fluid conveyance and thermal management
technology
Senior has a focused and compelling strategy to maximise value
for shareholders, and is confident of delivering its target return
on capital employed of minimum 13.5%(10) (post IFRS 16) over the
medium-term through the following:
-- A strategic focus on IP-rich fluid conveyance and thermal
management
-- Reaping the benefits from the restructuring programme
-- Executing on its portfolio optimisation strategy to maximise
value creation
-- Driving its intrinsic strong cash generation
Through the pandemic Senior has maintained its focus on IP-rich
technology and manufacturing, with a strategic focus on fluid
conveyance and thermal management technology. We have identified
significant current and future opportunities for the Group in fluid
conveyance and thermal management and this capability continues to
be highly relevant as we transition towards a low carbon
economy.
Senior's end-markets are evolving to reflect the global effort
to achieve net zero carbon emissions. Senior's technology and
product roadmap is aligned to these trends with a product
development strategy that is compatible with our focus on ESG.
Senior has continued its "Prune to Grow" strategy of portfolio
optimisation by divesting, closing, or combining non-core or
performance-challenged assets. This has included:
-- the disposals of sub scale composites businesses in Wichita,
U.S.(11) and the U.K., Blois (France) and Brazil automotive
businesses(12) , and our small precision machining business
of Absolute in WA, U.S.;
-- the closures of our oil and gas machining Senior Flexonics
Malaysia(13) , South Carolina assembly facility(14) , the
closure of Bosman(15) following transfer of production
from the Netherlands to France;
-- combining businesses under strong leadership: Fluids Systems
and Structures Divisions, Jet and Ketema Southern California
Aerospace businesses, AMT and Damar Washington State Aerospace
businesses, Ermeto and Calorstat French Aerospace businesses;
and
-- strategic divestments such as the $74m raised from the
successful sale of Aerospace Connecticut helicopter structures
business(16) .
We also remain confident that our Aerostructures core market
will recover, driving business performance improvement which will
provide the Group with strategic optionality over the
medium-term.
4. The Final Conditional Proposal still fundamentally
undervalues Senior and its future prospects
We believe Lone Star's Final Conditional Proposal still
fundamentally undervalues Senior at a time when external factors
are currently resulting in an unrepresentative financial profile
for Senior.
An analysis of precedent transactions for Fluid Systems &
Thermal Management and Structures businesses highlights there is
substantial embedded value within the Senior portfolio. Recent
Fluid Systems and Thermal Management businesses transactions have
valued the businesses at a range of 2.3x - 4.7x Enterprise Value /
LTM Revenue(17) , while recent transactions of Structures
businesses have been valued between 0.9x - 2.5x Enterprise Value /
LTM Revenue(18) . This compares to Lone Star's Final Conditional
Proposal representing an Enterprise Value / LTM Revenue ratio of
1.0x when applied to pre-Covid 2019 revenues, or 1.5x when applied
to heavily impacted 2020 revenues(19) .
Conclusion
The Board believes that the Final Conditional Proposal is highly
opportunistic and, after detailed consideration, has determined
that it still fundamentally undervalues Senior and its future
prospects. Senior has a focused and compelling strategy to achieve
growth and create value for shareholders over the medium term.
Furthermore, the Board remains confident that the Company's
performance will continue to improve and accordingly, is not able
to recommend a sale of the business at 200p per share.
Trading Update
Trading in the five months ended May 2021 has been ahead of
management expectations. Group sales were 15% lower (on a constant
currency basis) than the equivalent period in the prior year, part
of which was pre-COVID. Net debt (excluding capitalised leases of
GBP74m) as at end of May 2021 was GBP101m, reflecting net cash
proceeds received from Senior Aerospace Connecticut divestiture(20)
.
Our restructuring programme delivered cumulative savings of
GBP36m to the end of 2020 and we are expecting these to increase to
GBP45m by the end of 2021 and GBP50m annualised savings from
2022(1) .
Looking ahead, our differentiated offering in fluid conveyance
and thermal management products; our investment in low carbon and
advanced manufacturing technology; our global footprint; our strong
track record and commitment to the highest ESG standards and our
positioning in attractive and diverse end markets means that the
Board is confident we will make good progress as the recovery
continues.
We intend to provide a post-close trading update on 9 July 2021.
Our interim results will be announced on 2 August 2021, at which
time we will provide a full market and strategy update. In
addition, we intend to host a capital markets day in October 2021,
the theme of which will be our fluid conveyance and thermal
management strategy: further details will be provided in due
course.
A presentation for analysts and investors will be made available
on Senior's website at:
https://www.seniorplc.com/investors/possible-offer.aspx
Enquiries:
Senior plc
David Squires - Group Chief Executive Tel: +44 (0)1923
Bindi Foyle - Group Finance Director 775547
Lazard
Financial adviser to Senior Tel: +44 (0)207 187
Richard Shaw / Louise Campbell / James Cliffe 2000
Credit Suisse
Joint corporate broker to Senior Tel: +44 (0)207 888
Antonia Rowan / David Watkins 8888
Jefferies
Joint corporate broker to Senior Tel: +44 (0)207 029
Paul Nicholls / David Genis 8000
Finsbury Glover Hering
Communications adviser to Senior Tel: +44 (0)207 251
James Murgatroyd / Richard Webster-Smith 3801
Important Notes
There can be no certainty either that an offer will be made nor
as to the terms of any offer, if made. A further announcement will
be made when appropriate.
For the purposes of Rule 2.5(a) of the code, this announcement
has been made by Senior without the prior agreement or approval of
Lone Star.
In accordance with Rule 2.6(a) of the Code, Lone Star is
required, by no later than 5.00 p.m. (London time) on 25 June 2021,
to either announce a firm intention to make an offer for the
Company in accordance with Rule 2.7 of the Code or announce that it
does not intend to make an offer, in which case the announcement
will be treated as a statement to which Rule 2.8 of the Code
applies. This deadline can be extended with the consent of the
Panel on Takeovers and Mergers in accordance with Rule 2.6(c) of
the Code.
Disclaimer
Lazard & Co., Limited ("Lazard"), which is authorised and
regulated in the United Kingdom by the Financial Conduct Authority,
is acting exclusively as financial adviser to Senior and no one
else in connection with the matters set out in this announcement
and will not be responsible to anyone other than the Senior for
providing the protections afforded to clients of Lazard & Co.,
Limited nor for providing advice in relation to the matters set out
in this announcement. Neither Lazard & Co., Limited nor any of
its affiliates owes or accepts any duty, liability or
responsibility whatsoever (whether direct or indirect, whether in
contract, in tort, under statute or otherwise) to any person who is
not a client of Lazard & Co., Limited in connection with this
announcement, any statement contained herein or otherwise.
Credit Suisse International ("Credit Suisse"), which is
authorised by the Prudential Regulation Authority and regulated by
the Financial Conduct Authority and the Prudential Regulation
Authority in the United Kingdom, is acting as joint corporate
broker exclusively for Senior and for no one else in connection
with the matters set out in this announcement, and will not be
responsible to anyone other than Senior for providing the
protections afforded to clients of Credit Suisse, nor for providing
advice to any other person in relation to the content of this
announcement or any other matter referenced herein. Neither Credit
Suisse nor any of its subsidiaries, branches or affiliates owes or
accepts any duty, liability or responsibility whatsoever (whether
direct or indirect, whether in contract, in tort, under statute or
otherwise) to any person who is not a client of Credit Suisse in
connection with this announcement, any statement contained herein
or otherwise.
Jefferies International Limited ("Jefferies"), which is
authorised and regulated in the United Kingdom by the Financial
Conduct Authority, is acting for Senior and no one else in
connection with the matters set out in this Announcement. In
connection with such matters, Jefferies will not regard any other
person as their client, and will not be responsible to any persons
other than Senior for providing the protections afforded to clients
of Jefferies or for providing advice in relation to the contents of
this announcement or any other matter referred to herein. Neither
Jefferies nor any of its subsidiaries, affiliates or branches owes
or accepts any duty, liability or responsibility whatsoever
(whether direct, indirect, consequential, whether in contract, in
tort, under statute or otherwise) to any person who is not a client
of Jefferies in connection with this announcement, in any statement
contained herein or otherwise.
Rule 26.1 Disclosure
In accordance with Rule 26.1 of the Code, a copy of this
announcement will be available at
https://www.seniorplc.com/investors/rns-announcements.aspx , by no
later than 12 noon (London time) on 23 June 2021. The content of
the website referred to in this announcement is not incorporated
into and does not form part of this announcement.
Disclosure requirements of the Code
Under Rule 8.3(a) of the Code, any person who is interested in
1% or more of any class of relevant securities of an offeree
company or of any securities exchange offeror (being any offeror
other than an offeror in respect of which it has been announced
that its offer is, or is likely to be, solely in cash) must make an
Opening Position Disclosure following the commencement of the offer
period and, if later, following the announcement in which any
securities exchange offeror is first identified. An Opening
Position Disclosure must contain details of the person's interests
and short positions in, and rights to subscribe for, any relevant
securities of each of (i) the offeree company and (ii) any
securities exchange offeror(s). An Opening Position Disclosure by a
person to whom Rule 8.3(a) of the Code applies must be made by no
later than 3.30 pm (London time) on the 10th business day following
the commencement of the offer period and, if appropriate, by no
later than 3.30 pm (London time) on the 10th business day following
the announcement in which any securities exchange offeror is first
identified. Relevant persons who deal in the relevant securities of
the offeree company or of a securities exchange offeror prior to
the deadline for making an Opening Position Disclosure must instead
make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes,
interested in 1% or more of any class of relevant securities of the
offeree company or of any securities exchange offeror must make a
Dealing Disclosure if the person deals in any relevant securities
of the offeree company or of any securities exchange offeror. A
Dealing Disclosure must contain details of the dealing concerned
and of the person's interests and short positions in, and rights to
subscribe for, any relevant securities of each of (i) the offeree
company and (ii) any securities exchange offeror, save to the
extent that these details have previously been disclosed under Rule
8 of the Code. A Dealing Disclosure by a person to whom Rule 8.3(b)
of the Code applies must be made by no later than 3.30 pm (London
time) on the business day following the date of the relevant
dealing.
If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire or control an
interest in relevant securities of an offeree company or a
securities exchange offeror, they will be deemed to be a single
person for the purpose of Rule 8.3 of the Code.
Opening Position Disclosures must also be made by the offeree
company and by any offeror and Dealing Disclosures must also be
made by the offeree company, by any offeror and by any persons
acting in concert with any of them (see Rules 8.1, 8.2 and 8.4 of
the Code).
Details of the offeree and offeror companies in respect of whose
relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Takeover Panel's website at www.thetakeoverpanel.org.uk ,
including details of the number of relevant securities in issue,
when the offer period commenced and when any offeror was first
identified. You should contact the Panel's Market Surveillance Unit
on +44 (0)20 7638 0129 if you are in any doubt as to whether you
are required to make an Opening Position Disclosure or a Dealing
Disclosure.
Forward-looking statements
This announcement contains statements about Senior that are or
may be forward looking statements. All statements other than
statements of historical facts included in this announcement may be
forward looking statements. Without limitation, any statements
preceded or followed by or that include the words "targets",
"plans" "believes", "expects", "aims"," intends", "will", "may",
"anticipates", "estimates", "projects" or words or terms of similar
substance or the negative thereof, are forward looking statements.
Forward looking statements include statements relating to future
capital expenditures, expenses, revenues, earnings, synergies,
economic performance, indebtedness, financial condition, dividend
policy, losses and future prospects or discussions of strategy
which involve risks and uncertainties. Such forward looking
statements involve risks and uncertainties that could significantly
affect expected results and are based on certain key assumptions.
No assurance can be given that such future results will be
achieved. Actual events or results may differ materially as a
result of risks and uncertainties facing Senior. Such risks and
uncertainties could cause actual results to vary materially from
the future results indicated, expressed or implied in such forward
looking statements. The forward looking statements contained in
this announcement speak only as at the date of this announcement.
Except to the extent required by applicable law, Senior will not
necessarily update any of them in light of new information or
future events and undertakes no duty to do so. By their nature,
forward looking statements involve risk and uncertainty because
they relate to events and depend on circumstances that shall occur
in the future. These events and circumstances include changes in
the global, political, economic, business, competitive, market and
regulatory forces, future exchange and interest rates, changes in
tax rates, future business combinations or disposals, and any
epidemic, pandemic or disease outbreak. If any one or more of these
risks or uncertainties materialises or if any one or more of the
assumptions proves incorrect, actual results may differ materially
from those expected, estimated or projected. Such forward looking
statements should therefore be construed in the light of such
factors.
Appendix
Sources of Information and Bases of Calculation
Currency
Unless otherwise stated: (i) GBP or GBP refers to pounds
sterling, the lawful currency of the UK (and references to pence or
p shall be construed accordingly); and (ii) USD or $ refers to US
Dollars.
No Profit Forecast
References throughout this document to medium term ROCE are
aspirational targets which should not be construed as a profit
forecast under the Takeover Code or interpreted as such.
1 Senior company information, "2020 Full Year Results" presentation, 01 Mar 2021.
2 Senior company information, Jun 2021. 2020 net debt is stated
pro forma for disposal of Senior Aerospace Connecticut, adjusting
for GBP49m net proceeds.
3 IATA, "An almost full recovery of air travel in prospect", 26 May 2021.
4 Airbus "Airbus achieves new commercial aircraft delivery
record in 2018", 09 Jan 2019; Airbus, "Airbus updates production
rates in response to market environment", 21 Jan 2021; "Airbus
provides suppliers with an update on production plans", 27 May
2021.
5 Boeing, "Statement from Boeing CEO Dennis Muilenburg: We Own
Safety - 737 MAX Software, Production and Process Update", 05 Apr
2019; Boeing, "Boeing Reports First-Quarter Results", 28 Apr
2021.
6 US Department of Defense (DoD), "Fiscal Year 2022 Budget
Request", 28 May 2021; US DoD, "National Defense Budget Estimates
for FY2021", Apr 2020; US Office of Management and Budget, "Budget
of the US Government Fiscal Year 2022", 28 May 2021.
7 ACT Research, "North America Commercial Vehicle Outlook", 10 Jun 2021.
8 IHS Markit, 10 Jun 2021.
9 McKinsey, "Global oil outlook to 2040", 26 Feb 2021.
10 Return on capital employed (ROCE) sourced from Senior company
information, "Senior plc Annual Report & Accounts 2020", 08 Mar
2021. ROCE is the Group's adjusted operating profit divided by the
average of the capital employed at the start and end of the period,
capital employed being total equity plus net debt.
11 Composites businesses in Wichita, U.S. - "2017 Annual Results
Release", 26 Feb 2018.
12 Blois (France) & Brazil automotive businesses and
precision machining business of Absolute - "2019 Annual Results
Release", 02 Mar 2020.
13 Senior Flexonics Malaysia - "2020 Annual Results Release", 08
Mar 2021.
14 South Carolina - 2019 Annual Results Release", 02 Mar
2020.
15 Bosman - "2020 Annual Results Release", 08 Mar 2021.
16 Senior Aerospace Connecticut - "Senior plc - Q1 Trading
Update and Completion of Senior Aerospace Connecticut Divestment",
23 April 2021.
17 Precedent transactions in Fluid Systems & Thermal
Management
Date Acquirer / Target EV / Sales
(x)
-------- -------------------------------------- ----------
Stanley Black & Decker / Consolidated
Jan-20 Aerospace Manufacturing (CAM) 3.9x
Jul-19 Parker / Exotic Metals 3.8x
Oct-18 Smiths Group / United Flexible, Inc. 2.3x
Feb-18 AMETEK / FMH 4.7x
Nov-15 Senior plc / STEICO 2.4x
Leggett & Platt / Western Pneumatic
Dec-11 Tube 3.3x
-------- -------------------------------------- ----------
Average 3.4x
------------------------------------------------ ----------
"Precedent Transactions" - Enterprise Value over Revenue
multiples are based on publicly available information. Please see
sources below.
Fluid Systems & Thermal Management
-- Stanley Black & Decker / Consolidated Aerospace Manufacturing
(CAM): 3.9x
- Enterprise Value: $1,460m (Source: Stanley Black &
Decker Form 10-Q for the quarterly period ended March
28, 2020, page 13)
- Revenue: $375m (Source: Stanley Black & Decker Press
Release "Stanley Black & Decker Reports Full Year
And 4Q 2019 Results", published on January 29, 2020,
page 5)
-- Parker Hannifin / Exotic Metals: 3.8x
- Enterprise Value: $1,725m (Source: Parker Hannifin
Corp. announcement "Parker to Acquire Exotic Metals
Forming Company in Strategic Transaction that Significantly
Expands Aerospace Group Product Portfolio", released
on July 29, 2019)
- Revenue: $450m (Source: Parker Hannifin Corp. announcement
"Parker to Acquire Exotic Metals Forming Company in
Strategic Transaction that Significantly Expands Aerospace
Group Product Portfolio", released on July 29, 2019).
Please note, this represents expected revenue
-- Smiths Group plc / United Flexible, Inc.: 2.3x
- Enterprise Value: $345m (Source: Smiths Group plc
Interim Results for the half year ended 31 January
2019, published on Friday 22 March 2019, page 1)
- Revenue: $153m (Source: Smiths Group plc Interim Results
for the half year ended 31 January 2019, published
on Friday 22 March 2019, page 31)
-- AMETEK / FMH Aerospace: 4.7x
- Enterprise Value: $235m (Source: AMETEK announcement
"AMETEK COMPLETES TWO ACQUISITIONS", released on February
1, 2018)
- Revenue: $50m (Source: AMETEK announcement "AMETEK
COMPLETES TWO ACQUISITIONS", released on February
1, 2018)
-- Senior plc / STEICO: 2.4x
- Enterprise Value: $90m (Source: Senior plc press release
"Trading Update & Acquisition", released on November
19, 2015)
- Revenue: $36.9m (Source: Senior plc press release
"Trading Update & Acquisition", released on November
19, 2015)
-- Leggett & Platt / Western Pneumatic Tube: 3.3x
- Enterprise Value: $188m (Source: Leggett & Platt,
Inc. press release "Leggett & Platt to Acquire Western
Pneumatic Tube", released on December 20, 2011)
- Revenue: $57m (Source: Leggett & Platt, Inc. press
release "Leggett & Platt Completes Acquisition of
Western Pneumatic Tube", released on January 12, 2012)
18 Precedent transactions in Structures
Date Acquirer / Target EV / Sales
(x)
-------- --------------------------------------------- ----------
PCX Aerostructures / Senior Aerospace
Mar-21 Connecticut 1.7x
Oct-19 Spirit Aerosystems Holdings / Bombardier 1.2x
Shaanxi Ligeance Mineral Resources / Gardner
Apr-17 Aerospace 2.5x
Feb-17 Sonaca Group / LMI Aerospace 1.2x
Jul-15 GKN / Fokker Technologies Group 0.9x
-------- --------------------------------------------- ----------
Average 1.5x
------------------------------------------------------- ----------
Structures
-- PCX Aerostructures / Senior Aerospace Connecticut: 1.7x
- Enterprise Value: $74m (Source: Senior plc RNS, released
on March 5, 2021)
- Revenue: $43.1m (Source: Senior plc RNS, released on
March 5, 2021)
-- Spirit AeroSystems / Bombardier (Select Structures assets):
1.2x
- Enterprise Value: $1,200m (Source: Bombardier announcement
"Bombardier Confirms the Closing of the Aerostructures
Business Transaction", released on October 20, 2020)
- Revenue: $1,000m (Source: Spirit AeroSystems announcement
"Spirit AeroSystems to Acquire Select Assets Of Bombardier
Aerostructures and Aftermarket Services Business",
released on October 31, 2019)
-- Shaanxi Ligeance Mineral Resources / Gardner Aerospace
Holdings: 2.5x
- Enterprise Value: GBP326m (Source: Better Capital PCC
Limited RNS "Disposal of Gardner Aerospace Completion",
released on June 12, 2017)
- Revenue: GBP132m (Source: Better Capital PCC Limited
RNS "Disposal of Gardner Aerospace Completion", released
on June 12, 2017)
-- Sonaca Group / LMI Aerospace: 1.2x
- Enterprise Value: Implied Enterprise Value calculated
based on the following. Total shares outstanding of
13,621,267 (Source: LMI 10-K for the year ended December
31, 2016) multiplied by the offer price of $14 per
share (Source: LMI Aerospace announcement "LMI Aerospace
and Sonaca Group Close on Sonaca's Acquisition of LMI",
released on June 27, 2017). This gives an implied market
capitalisation of $191m. Adding total current debt
of $3m and total long-term debt of $237m, less total
cash of $2m (Source: LMI 10-K for the year ended December
31, 2016) gives an implied Enterprise Value of $428m
- Revenue: $346m (Source: LMI 10-K for the year ended
December 31, 2016)
-- GKN plc / Fokker Technologies Group: 0.9x
- Enterprise Value: EUR706m (Source: GKN plc announcement
"GKN agrees to acquire Fokker Technologies for EUR706
million", released on July 28, 2015)
- Revenue: EUR758m (Source: GKN plc announcement "GKN
agrees to acquire Fokker Technologies for EUR706 million",
released on July 28, 2015)
19 "EV / Sales Implied Valuation" - Lone Star's implied
Enterprise Value / Sales multiple, calculated based on the number
of Senior shares outstanding, 419,418,082 (Source: Senior PLC
"Statement re Possible Offer", released on May 28, 2021) multiplied
by the Final Conditional Proposal price of 200p. This equals an
implied market capitalisation of GBP839m. Implied Enterprise Value
of GBP1,017m is calculated by adding Senior total EV adjustment of
GBP178m to the implied market capitalisation. This implied
Enterprise Value is then divided by both 2019 and 2020 divisional
revenues, pro forma for disposals. Total EV adjustments include pro
forma net financial debt of GBP95m (net debt of GBP221m, as at the
end of March 2021, excluding lease liabilities of GBP76m and cash
impact of Connecticut disposal of GBP49m), lease liabilities of
GBP76m, other EV adjustments of GBP7m (comprising investments in
joint ventures of GBP4m, pensions of GBP11m taxed at 21%, and
expected litigation cash outflows of GBP2m (Sources: Senior plc
Trading Update, released April 23, 2021 and Senior plc Annual
Report 2020)).
20 Senior company information, Jun 2021. The adoption of IFRS 16
does not impact the Group's lending covenants as these are
currently based on frozen GAAP, hence figures quoted exclude the
impact of IFRS 16 on net debt.
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