Bodycote PLC

Bloomberg News reports that the value of takeovers of companies listed on the UK stock market since the start of the year has surged more than 200% to nearly $110 billion, following a summer that saw several large deals announced, with foreign investors and private equity firms still seeking attractively valued businesses. The latest and largest deal is Veritas Capital's acquisition of Bodycote Plc for approximately £1.65 billion, or $2.2 billion, while Epiris has offered around £1 billion to buy Gamma Communications Plc, and Norway's energy company DNO has reached an agreement to acquire Capricorn Energy Plc for about £292 million. These deals follow the busiest summer on record for the UK M&A market, which previously saw acquisitions of EasyJet Plc and Segro Plc. Much of the buying has come from foreign companies and private equity funds looking for attractively priced assets in the UK stock market, which offers appealing valuations. Several UK companies have already been acquired, including Schroders Plc, Intertek Plc, and Beazley Plc. The acceleration of M&A deals is good news for investment banks in London, but it reflects the long-term challenges facing the UK capital markets, as London experiences a sluggish IPO and listing market, which could impact the ecosystem of the financial industry in the city.

Bodycote reported first-half core organic revenue growth of 9.6%, driven by strong demand in aerospace and defense, industrial gas turbines, medical, and semiconductor-related markets, while automotive weakness persisted. Core operating profit rose 11% organically to £60.4 million, and core operating margin increased 30 basis points to 16.2%. Group revenue, including non-core businesses being exited, grew 6.5% organically to £381.2 million, with group operating profit of £61 million and group operating margin up 110 basis points to 16%. Adjusted earnings per share rose 18.3% to 25.2 pence, and the interim dividend was increased 4%. The company reaffirmed its full-year expectations and expects growth to moderate in the second half due to tougher prior-year comparisons, particularly in aerospace.