- Strategic review includes possible sale of business
- Two stage process inviting indicative offers
- Operational improvements made in last three years
Shares in Benchmark (BMK:AIM) surged more than 25% higher to 44p on Monday after the leading aquaculture genetics and nutrition firm formally put itself up for sale.
Over the last year the shares are up around 3% compared with a 4% drop in the FTSE All-Share index.
The board said it believes the current share price ‘materially’ undervalues the combined value of Benchmark’s businesses and their long-term prospects due in part to the tightly held and illiquid nature of the company’s shares.
After consulting with major shareholders, the board has unanimously decided to undertake a strategic review of the company’s options which could include a sale of the whole business or potential sales of one or more of its business units.
TARGETED PROCESS
Benchmark explained that while it is not currently in any live discussions with potential bidders, from today it is considered to be in an ‘offer period’ under UK takeover rules.
The board has been granted dispensation from the takeover panel to have discussions with interested parties without them being publicly identified and the parties will not be required to make a formal offer within 28 days.
A targeted approach includes phase one where interested parties will be invited to submit non-binding indicative offers after reviewing an information pack.
The board then anticipates inviting a select number of parties to participate in a second phase. There is no certainty an offer will be made or that individual business units will be sold.
BIG IMPROVEMENTS MADE
Arguably the company has completed a lot of the hard work to increase profitability and become more focused over the last few years.
Since 2020 sales have jumped 61% to £170 million while earnings before interest, tax, depreciation, and amortisation have more than doubled to £35.5 million, equating to a margin of 21%.
Despite facing headwinds in its core shrimp market, the company increased operational cash conversion from 35% to 58% in 2023, demonstrating improving operational efficiency.
Consensus analyst forecasts see Benchmark making a net profit of around £2 million in the financial year to 30 September 2024, climbing to £12.6 million in 2025.
