- MoD deal worth £250 million
- UK missile defence critical
- Roke rapidly gaining orders
The good news keeps coming for defence company Chemring (CHG) and its investors with today’s announcement of a new £251 million multi-year contract from the UK’s MoD (Ministry of Defence).
The shares, which recently hit a new 10-yar high of 421p before easing back, gained 14p or 3.7% to 391p.
PRIME CONTRACTOR
The framework contract, known as STORM (Science and Technology Oriented Research in Missile defence), covers a broad spectrum of missile defence capabilities and is set to run over six years, starting immediately.
As the prime contractor to the programme, Chemring’s Roke division will self-deliver certain elements of the contract and manage other industry partners as they deliver their contributions.
‘We are delighted Roke has been trusted to deliver STORM for the UK MDC,’ said Chemring’s chief executive Michael Ord.
‘In today's complex and changing security environment, effective missile defence is crucial to protecting the UK's interests. This contract recognises Roke's heritage in helping customers solve complex problems, and places Roke at the heart of the UK's missile defence research and development activities.’
In January, Chemring announced Hampshire-based Roke had signed a multi-year contract with a major US defence ‘prime’ for the supply of its high-speed miniature radar altimeter for use in missile systems and UAVs (unmanned aerial vehicles).
The contract was said to be worth at least £26 million over four years with production based in the UK and deliveries starting this October.
POTENTIAL BID TARGET
In February, talk circulated that Boston-based private equity firm Bain Capital had made an approach to Chemring with an initial cash offer of 390p per share, valuing it at £1 billion.
There was also talk of a second offer, although nothing has so far materialised.
Interviewed by Citywire, shareholder Roland Arnold, who manages BlackRock Smaller Companies (BRSC), said the rumoured bid ‘significantly’ undervalued the company and highlighted the firm’s robust trading update and £40 million share buyback.
