De La Rue in talks over near-£100m deal to sell stake
The group said it was in discussions with UK private equity firm Disruptive Capital GP and Pension SuperFund Capital over the potential stake sale.
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Your support makes all the difference.Banknote printer De La Rue has revealed talks to sell up to a 40% stake in the business for £98 million as it also explores a possible sale of the currency division.
The group said it was in discussions with UK private equity firm Disruptive Capital GP and Pension SuperFund Capital over the potential stake sale, which would price its shares at £1.25 each.
De La Rue said the two firms – acting under the name PSFC Entities – would not be seeking to take control of the business.
The Basingstoke-based group, which prints banknotes for the Bank of England and other central banks across the world, also remains in ongoing talks over a possible sale of the currency division, or the business as a whole.
De La Rue said: “The PSFC Entities have indicated that they are not seeking statutory control of the company and have confirmed their support for the company’s management and current strategy, including the announced disposal of the authentication division and the ongoing discussions with other parties in relation to the company’s currency division.”
We're not in any hurry to do anything strategic in terms of a sale
De La Rue chief executive Clive Vacher told the PA news agency the firm had been approached by “multiple parties” interested in a deal.
He said the firm was now gathering expressions of interest.
He said: “We’re not in any hurry to do anything strategic in terms of a sale, but it’s right for us to pursue these discussions to see if it ultimately turns out to be the right thing for out stakeholders.”
The 211-year-old group agreed the sale of its authentication arm to US-based firm Crane NXT in October in a deal worth £300 million.
The move sparked the break-up of the business, which has been struggling with a downturn in demand for cash since the pandemic, while in July it cautioned over its ability to continue as a going concern due to the payment of a loan due in July next year.
The deal with Crane NXT will allow it to repay the loan in full, while also helping reduce the funding deficit on its former defined benefit pension scheme, according to De La Rue.
Half-year earnings out on Thursday showed a 7.6% drop in earnings as the firm’s performance was dragged down by its currency arm due largely to the timing of contracts.
The group reported underlying earnings falling to £7.3 million for the six months to September 30 as revenues fell 10.2%.
It saw underlying earnings in the currency division fall 21% to £1.1 million in the first half as it said some contract deliveries had been shifted into the second half.
Revenues in the division tumbled 16.3% over the half year.
Our currency business is absolutely flying
But Mr Vacher said the group’s currency business had a brighter outlook thanks to recent contract wins, with its order book standing at £338 million at the end of November.
This is up from £239.2 million at the end of March and the highest for at least five years and possibly some 20 years, according to Mr Vacher.
He told PA: “Our currency business is absolutely flying.”
The group is benefiting from the global shift to polymer banknotes, the introduction of new security features on notes, as well as increased demand worldwide due to high inflation in recent years and a rising population.
The group said it remained on track for full-year underlying earnings of “mid to high £20 millions”, while the currency orders will start to boost revenues and earnings in the new financial year.
On a statutory basis, the group saw interim pre-tax losses narrow to £6.5 million from £16.8 million a year earlier.
It is currently splitting out the authentication business ahead of the sale to Crane completing in the first half of 2025.
Around 1,700 staff are employed across the division, with about 500 transferring to Crane and the remaining 1,200 being reallocated across De La Rue’s remaining operations.
Mr Vacher said he does not “anticipate it to result in any job losses in the short term”.