Thursday, September 29, 2011

Diary: DLAR

DLAR: De La Rue
DLAR is a money printer. In 2010 there was a big debacle, where it announced that an employee had falsely signed off on quality controls. This led to a loss of confidence, and the withdrawal of India from its contract. Oberthur, a rival, then made a bid for DLAR, which was rebuffed. They are locked out of a bid for 6 months. This post on LSE sums up the position nicely:
Despite the apparent bad news from India, DLR has performed well against the market - actually going up when most other stocks were being caned. I read this as - India - no surprise, expected in fact and therefore in the SP. Takeover - Oberther can come back again in Dec - which is only 9 weeks away - and they have been selling assets to feed a war chest of cash. That doesn't mean they WILL come again, but it does mean they CAN and don't forget they hired the ex-CEO of DLR for "special projects". Anyone can put 2 + 2 together and get 4, but if O are not planning a rebid, their behaviour is mighty peculiar. That is what is probably driving the price gently but ever upwards. The last failed bid was 935p and major shareholders wanted £10. I'd hate to see DLR go to foreign ownership, but hey for £10 - bring it on. I think there are others out there who agree with this logic and are accumulating.
Makes sense, right? Very interesting situation. Unlike a lot of analysts speculations, this one seems pretty credible to me.

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