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Takeover Bid? Chemring Awaits Carlyle’s Decision

Sep. 13, 2012 - 02:30PM   |  
By ANDREW CHUTER   |   Comments
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LONDON — British defense contractor Chemring will find out Sept. 14 whether U.S. private equity group Carlyle is to make a firm bid for the countermeasures, munitions and pyrotechnics maker.

Chemring issued a statement in mid-August saying Carlyle had made a “very preliminary expression of interest.” Under the British takeover code, the private equity group has until 5 p.m. U.K. time Sept. 14 to make a formal bid, withdraw or ask for an extension.

A profits warning from Chemring last month is said by analysts to have reduced the chances of a takeover bid from Carlyle.

Chemring reported sales last year of 745 million pounds ($1.2 billion). A substantial proportion of its activities are based in the U.S.

The decision comes at the end of a week that has seen proposals emerge for Europe’s largest-ever aerospace and defense merger between Britain’s BAE Systems and EADS.

In a research note on the potential BAE-EADS merger, the Lisbon-based investment bank Espirito Santo said that accelerating consolidation bodes positively for other defense-centric plays in the sector, naming Chemring along with QinetiQ and Ultra Electronics. All three British-based companies have sizeable U.S. interests.

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