While the rumours proved to be true that De La Rue (DLAR) had received a bid from its French rival, Oberthur Technologies, worth £895 million (or 905p per share), the company has officially spurned the offer, stating that the proposal was highly opportunistic and "in no way reflects the fundamental value" of the firm. Having thought that the 900p-1,000p per share bid bandied about earlier today was a bit on the rich side (considering the issues that are currently impacting De La Rue), we were surprised to see that the actual offer was at the lower end of this range. Management obviously believes that more can
be extracted from potential buyers, which (besides Oberthur) could include private equity firms or even German banknote printer Giesecke & Devrient (although a deal between the German company and De La Rue could prove difficult, given that the combined firms would hold considerable sway over the global outsourced banknote market). We would argue, however, that until the firm resolves its production problems, which could result in the loss of one of its biggest clients, it is in no position to negotiate a higher premium. De La Rue's shares closed up 30% today on news of the potential takeover, which leaves its stock price trading in line with our fair value estimate of 844p. We will continue to monitor the situation as it unfolds.