Privately owned Saria is focused on the agriculture, food and biofuels sectors and operates from more than 200 locations in 26 countries employing some 10,500 workers. Its cash offer places an enterprise value of £667 million on Devro and marks a 65 per cent premium on Thursday’s closing share price of 192p. Under the terms of the recommended acquisition, Devro shareholders will be entitled to receive 316.1p in cash for each share held.
Saria said it would look to invest in and grow Devro and pointed to its strong track record of integrating and investing in acquisitions, including several in the UK. It described Devro’s product offering as “highly complementary” to Saria’s existing product portfolio, particularly in the sausage casings market. The acquisition is being implemented by indirect subsidiary Saria Nederland - Bidco. The firm said it planned to undertake a “detailed review” of Devro's research and development function, with the potential for additional investment.
Steve Good, chairman of Devro, said: “The Devro board believes that the offer from Saria, which represents a premium of 92 per cent to the closing price on the last business day [October 25] before receipt by the board of Bidco’s conditional indicative proposal, reflects the strength of Devro, our medium-term prospects, and recognises the substantial improvements made to the company through the successful implementation of our growth strategy. The offer also provides an opportunity for Devro shareholders to crystallise, in cash, the value of their investments at a fair and reasonable value.
“Furthermore, under the ownership of Saria, the combined business will have an enhanced product offering; will be a stronger more diversified group of scale; and will look to further accelerate long-term sustainable growth.”
Russ Mould, investment director at AJ Bell, noted: “A very generous takeover deal has been tabled for sausage skin maker Devro. The 316.1p takeover price puts the shares back to levels not seen since 2015. Devro has been plagued by profit warnings over the years, but it’s had a habit of bouncing back. While its latest half-year results showed profits slipping, the company was confident about the full year.”
Devro has a global footprint and employs nearly 2,000 people, with seven main production facilities in Scotland, Australia, China, the Netherlands, the Czech Republic and the United States. In a trading update, the firm said current trading and the full year outlook were slightly ahead of the board’s expectations.
Harald van Boxtel, chief executive of Bidco, said: “The proposed combination of Devro and the Saria group will bring together two leading international businesses with complementary product portfolios, particularly in the sausage casings market, providing a platform for sustainable and scalable growth in highly attractive and dynamic categories. Devro has built a reputation for manufacturing high quality products and providing a service to a customer base that is complementary to the Saria group’s. The combined businesses would be ideally placed to capture growth in both mature and emerging markets by maximising the combined sales and distribution platform, an improved research and development function and a wider range of products.”