- Siemens confirms it will not make offer
- Shares fall 4% and remain 35% below highs
- Renishaw remains a takeover target
With so many UK firms being picked-off by foreign buyers and private equity, it is refreshing to see German industrial giant Siemens (SIE:ETR) walk away from making an offer for engineering group Renishaw (RSW).
That said, investors were not best pleased with the shares falling 4% to £41.70 in early trading, leaving them up nearly a fifth for the year following a 16% gain on 5 February after a positive trading update.
The shares remain around a third below their all-time high of around £65 reached in April 2021 after the company announced a potential sale of the business.
Renishaw is a UK success story and one of the best performing shares since coming to the market over 30-years ago. The shares have delivered a compound annualised total return of close to 12% a year, according to Sharepad.
Noting press speculation, Siemens confirmed it does not intend to make a formal offer for Renishaw which precludes the German company making an offer for six months under UK mergers and acquisition rules.
PROTECTING COMPANY CULTURE
Majority shareholders and founders David McMurtry and John Deer, executive chair and non-executive deputy respectively, withdrew their intention to sell the company after considering the impact on the local community and employees.
The board said it didn’t want to just sell out to the highest bidder but were seeking a buyer who, ‘who will respect the unique heritage and culture of the business, its commitment to the local communities in which its operations are based, and who will enable the company to continue to prosper in the long term.’
Where does this leave the company now? AJ Bell investment director Russ Mould commented: ‘While Siemens may have poured cold water on speculation that it wants to buy precision engineer Renishaw, the latter still remains a prime takeover candidate.
‘Renishaw ticks the right boxes to be a bid target. It has specialist skills and a long track record of generating value for stakeholders. Its fortunes are heavily tied to the semiconductor industry where the prospects are improving after a year of oversupply.
‘Furthermore, 52.8% of the company is owned by Renishaw’s co-founders David McMurtry and John Deer, both of whom are in their 80s and want to sell down their positions.’
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (Martin Gamble) and the editor (Steven Frazer) own shares in AJ Bell.
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