Roxboro goes private

Andrew Bond, SCADA Insider, UK, alerted me on this :

"Roxboro (Solartron, Mobrey etc) are in negotiation with a VC to take the group private. Part of the explanation is that Roxboro is 'in an unloved sector'. The deal would value Roxboro at 210m UK pounds (17.9m UK pounds profit on 124.8m UK pounds sales in 1999). One for the revised Urge to Merge list before it goes unlisted!"

Roxboro makes plans to go private

Roxboro, the Cambridge-based specialist electronics group, has became the latest small company seeking to leave the stock market.

News that the executive directors were in talks Tuesday with a potential venture capital backer sent the shares up 41p to 3081/2p, valuing the company at £174m.

Analysts were not surprised by the executive directors' decision. "It is in an unloved sector of the market," one said. "Below a market cap of £200m, it remains difficult to capture the attention of institutional investors who are all much more interested in TMT [technology, media and telecommunications] stocks."

Last year the company made pre-tax profits of £17.9m (£17.4m) on sales of £124.8m, in spite of the weakness of the petrochemical sector which halved profits at the instrumentation division.

Reporting the results in March, Harry Tee, chief executive, said the group would be reorganising its eight subsidiaries into three brands focusing on the energy and process industries, aerospace and, finally, key growth markets such as communications.

UK Financial Times news story - June 14, 2000

Big fish are joining smaller fry in rush for the exit

Widespread shareholder disaffection is forcing an increasing number of large companies to withdraw from the stock market in favour of becoming private.

In the second quarter alone, nine companies struck or were involved in deals that added up to more than £6.5bn ($9.85bn), compared with £1.27bn in the first quarter.

They are part of a trend of smaller companies quitting the stock exchange that is likely to continue. Add in the 11 public-to-private deals in the first quarter and the running total this year hits 20, compared with a total of 34 for all of 1999.

UK Financial Times news story - July 2, 2000

Schroder targets £210m Roxboro

SCHRODER Ventures has emerged as the bidder for Roxboro, the Cambridge-based specialist electronics group that wants to leave the stockmarket in a deal estimated to be worth £210m.

Industry insiders say Schroder Ventures is in talks with Roxboro's management, led by Harry Tee, the chief executive, to launch a bid for the group at about 360p a share. It is expected to make an offer in the next few weeks. Roxboro's plan to go private emerged nearly two weeks ago. Since then its share price has leapt from 265p to Friday's 317.5p. Schroder Ventures refused to comment on the situation.

Analysts say Roxboro is being forced to consider a move to go private as it is in an unloved sector. In an attempt to buck the trend, the group announced plans in March to reorganise its eight subsidiaries into three brands. It said that these would focus on energy and process industries, aerospace and key growth markets such as communications, traffic signals and metering.

The group's profits have grown slowly but steadily since 1995, proving Tee's strategy is working. In the year to December 1999 it made profits of £17.9m, on sales of £124.8m and analysts forecast a rise in profits to £21.3m in the current year. Last September, to reassure the City that Roxboro was making progress, Mr Tee announced that the order book had strengthened by 40 per cent.

UK Electronic Telegraph - June 25, 2000

Schroder Ventures raises £1.7bn for tech investment

SCHRODER Ventures, the venture capital arm of Schroders fund management, is expected to announce later this month that it has raised about Eu3 billion (£1.7 billion) for its latest fund.

Two leading investors said this would make it one of the largest European venture capital funds raised this year. Schroder Ventures is one of Europe's biggest investors in internet, telecom and technology startups, backing companies such as 365 Corporation and Silicon.Com.

UK Electronic Telegraph - May 6, 2000

Now, with higher profits, news comes that Roxboro has pulled out of talks with the VCs and has made a decision to remain public. When the buy-out talks were first revealed in June, Roxboro's shares were trading at 267 1/2p. Yesterday they fell 14 1/2p to 296 1/2p. Not a big difference, and one wonders how strong that price is, given the present fragile market conditions.

There continues to be pressure on companies in unfashionable sectors such as construction, property and engineering to find ways of boosting their share price and increasing shareholder value. Boards of almost any company in the automation business have had discussions about a buy-out. But for some companies good news - or bad - can mean that a buy-out/buy-in is no longer appropriate. If business improves, it is more viable for a company to remain public, and if it worsens, an alternative means of rescue must be found.

Harry Tee, CEO of Roxboro commented:

"Venture capitalists are not interested in the value of the company now, but in what they can extract in three years' time. They want deals that will provide an internal rate of return of 30 per cent plus a safety margin in the price. We were not under performing and we felt we would have been selling out cheaply."

Harry sent me this hot- link to the Roxboro website, with the comment: "Sometimes a business is doing too well to take private."

Take a look at the Financial Times story (Sep 20, 2000)