22.11.2016

Lavendon rejects TVH bid

Lavendon, owner of Nationwide Platforms, Rapid Access and DK Rental has rejected TVH's takeover bid.

TVH offered 205 pence a share, Lavendon approached a number of its major shareholders which rejected the proposal. Given that the offer was the maximum the TVH said it would bid, the Lavendon board has dismissed it. See TVH bids for Lavendon

The following statement was issued by Lavendon a couple of hours ago.

“The board of Lavendon notes the announcement issued earlier today by TVH Group with respect to an unrecommended cash offer for the entire issued and to be issued share capital of the company.

The board confirms that it received an unsolicited approach from TVH after Lavendon’s Half Year results in August. Following preliminary discussions, a non-binding proposal was received on 16 October 2016 from TVH regarding a possible cash offer for Lavendon to be effected by way of a Scheme of Arrangement and subject to certain pre-conditions including a limited amount of due diligence and the support of Lavendon’s major shareholders. Following further negotiations and once the limited due diligence was complete, TVH sought the support of Lavendon’s major shareholders. Following discussions with these shareholders, TVH indicated that a price of 205 pence per Lavendon share was the maximum price it would be prepared to pay.

Having consulted with certain of the shareholders approached by TVH, it was apparent that the level of support anticipated was not forthcoming. Consequently, the board unanimously concluded that it was unable to proceed with a recommended offer, regardless of the proposed offer structure, due to concerns over the significant execution risk and the potential disruption to Lavendon’s business. The board subsequently encouraged TVH to approach additional shareholders to establish whether TVH could secure further support but they declined to do so.

Lavendon is in robust health, well positioned across diverse geographic markets, with strong revenue growth, profits, cash flow and ROCE and a clear strategic direction to deliver substantial shareholder value over the medium term.
On 15 November, Lavendon issued its third quarter trading update, in which Don

Kenny, Lavendon’s chief executive, said: "The group's trading performance has continued to deliver strong revenue growth through the third quarter. This growth reflects the benefits of our strategic investment programmes in both 2015 and 2016 to strengthen our market positions in all regions, together with the further operational improvements we have made to support the delivery of our growth plans.

“The board is encouraged by the trading performance to date, and as a consequence of the favourable translational impact on our overseas earnings from the continuing weakness of Sterling, we expect the Group's results to be marginally ahead.”

Vertikal Comment

TVH previously took a run at Lavendon in late 2010, that battle went on for six weeks or so, with Ashtead eventually joining TVH in a joint bid. The plan was for Ashtead to take the Nationwide operation in the UK, while TVH would have had DK, Gardemann and Rapid Access in the Middle East.

That offer was eventually worth around £115p.

Lavendon shares have jumped 33 percent after the announcement this morning, taking them to 185 pence, well below the offer price, suggesting that few shareholders believe that a deal, which requires 75 percent acceptance, will go ahead.

Given the recent performance of Lavendon’s businesses shareholders may well do better to hold at this point rather than sell. TVH on the other hand will probably not give and may yet come back with an improved offer?