Volex’s Lord Rothschild urges TT Electronics to accept offer

Listed manufacturing specialists Volex believes its second offer for TT Electronics is “highly attractive”, as the firm’s chief Lord Rothschild urges shareholders to engage.

The first proposal comprised 62.9 pence in cash and 0.203 new Volex shares per TT Electronics share. The second proposal comprised 62.9 pence in cash and 0.223 new Volex shares per TT Electronics share which implied a price of 135.5 pence per share.

However, TT Electronics board declined to engage with Volex and rejected these offers.

Now, based on Thursday’s price, Volex’s second proposal would mean a value of 139.6 pence per TT Electronics share, valuing the fully diluted share capital at £248.6m.

The board of Volex informed its shareholders that it firmly believes that its second proposal offer is highly attractive opportunity for TT Electronics shareholders.

This comes as TT Electronics outlined its plans to cut more roles in order to mitigate the effect of “substantial market challenges”.

Lord Rothschild, executive chairman of Volex said: “We believe that bringing Volex and TT Electronics together in a highly synergistic transaction would create a scaled and diversified leader in the specialist electronics market.”

“Despite the resilience of TT Electronics’ underlying business, it has faced persistent challenges in recent years, which Volex believes have been exacerbated by execution missteps by the board.”

He also noted that since 1 January 2018, TT Electronics’ share price has declined by 65 per cent, compared to Volex’s, which has increased over 300 per cent.

“I therefore strongly encourage TT Electronics shareholders to urge the TT Electronics board to engage with Volex in delivering an expeditious and highly attractive outcome for all stakeholders,” he added

This comes as Volex released its half-year results showing a revenue increase over over 30 oer cent to $518.2m (£408m), including strong organic growth of near 10 per cent along with an increase in electric vehicles and consumer electricals sales.

It has reported its underlying operating margin “maintained comfortably” within the target range, while its interim dividend increased by over 7 per cent to 1.5 pence per share.

Nat Rothschild, Volex’s executive chairman stated “the strong performance during the period demonstrates once again that our strategy is working”.

“Our delivery to date, at the halfway point in our five-year plan, gives us increased conviction in our ability to achieve our goal of securing revenues of $1.2bn by the end of FY2027 at an underlying operating margin of 9-10 per cent,” he added.