A leading Chemring investor has said any offer should ‘strongly consider’ the firm’s future earning power, as defence spending increases across Europe.
US private equity group Bain Capital made a 390p-a-share offer worth £1.1billion for the British explosives maker last month, but it was knocked back.
Shares stand at 401p, up 21.7 per cent this year, with analysts expecting further gains as European nations boost their military firepower.
Experts say a successful bid would need to be more than 500p share – or £1.4billion.
Aviva Investors – its seventh biggest shareholder with a 4.89 per cent stake – has backed the firm.
Aviva fund manager Kunal Kothari told the Mail: ‘Given Chemring’s plans to invest in additional capacity to serve high-forecast demand for its products in the years to come, any offer needs to strongly consider the earnings power of this business once its capacity growth plans are executed, not its earnings power today.’
Takeover target: Chemring shares are up 21.7% this year, with analysts expecting further gains as European nations boost their military firepower
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