De La Rue shares jump 30% on news of French takeover bid

SHARES in troubled banknote printer De La Rue jumped by 30 per cent to 841p yesterday after French rival Oberthur Technologies confirmed that it wants to buy the company.

Oberthur said the world's biggest banknote printer had refused to enter discussions, adding that the board of De La Rue had last month rejected a bid for 905p a share, which valued the firm at about 895 million.

After the market closed, De La Rue confirmed that it had rejected the offer, and said the bid was "highly preliminary and opportunistic" and "in no way reflects the fundamental value of the company".

The share price has plummeted by more than a third in recent months following production problems that caused chief executive James Hussey to resign and cost the group 35m.

Nicholas Brookes, chairman of De La Rue, said the board had "no hesitation" rejecting the offer.

He added: "De La Rue has world-leading positions in growth markets with high barriers to entry. We are addressing the current issues, which should not detract from the attractive medium and long-term prospects for the company."

The French bid surpassed analysts' estimates, with brokers saying that an offer approach would need to be pitched in the region of 1,000p to have a realistic chance of securing the support of De La Rue's shareholders.

De La Rue, which issued a profit warning in September, had warned that production difficulties might lead to the loss of a top customer for whom faulty banknote paper had been produced.

The company didn't confirm who the client was but newspaper reports identified it as the Reserve Bank of India.

Analysts raised the possibility of rival bids from private equity, but also said that this would likely remain on the sidelines until there was clarity over the India contract.