Does IPL’s stock move suggest another twist?

Cantillon: Stock in the firm formerly known as One51 rises above offer price for first time

 

At first glance, headline second-quarter results from IPL Plastics, the company formerly known as One51 that is subject to an agreed takeover by US private equity group Madison Dearborn, may suggest that shareholders shouldn’t be too greedy and expect a better offer to emerge.

With revenues down 9 per cent on the year, adjusted earnings before interest, tax, deprecation and amortisation (Ebitda) off 6 per cent, and net profit having slumped 37 per cent to $5.3 million (€4.5 million), the challenges facing the group amid Covid-19 are clear.

However, Davy analyst Flor O’Donoghoe said the Ebitda figure of $26.8 million is a good deal better than the figure of close to $20 million he was expecting – noting that the Ebitda margin of 17.5 per cent was 0.6 percentage points higher than for the same period last year.

“With the proposed takeover of IPL Plastics [IPLP] seeking shareholder approval in late September, the group’s [second-quarter] results may be its last as a listed entity. If that is the case, IPLP will bow out having made good progress over the course of the last 18 months in improving the group’s operating margin,” concluded O’Donoghue.

The Toronto-listed Irish-run company, whose legacy shareholder include Irish farmers, dairy co-operatives and high-net-worth individuals, has given itself until the end of this month at least – and a further 10 days, if needed – to try to flush out a rival bid to Madison Dearborn’s 10 Canadian dollar-a-share offer.

Few analysts believe this will amount to anything.

There were stirrings on the Toronto Stock Exchange on Thursday however, with the stock rising above the offer price for the first time since the deal was announced at the end of July – to reach 10.31 Canadian dollars a share.

Whether this is wishful thinking on the part of investors or a sign that something may be afoot remains to be seen.

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