BROKER RECOMMENDATIONS

Date Broker Recommendation Price Old target price New target price Notes
08 Jul RBC Capital Markets Outperform 196.75 - 280.00 Reiterates
30 Jun Credit Suisse Neutral 196.75 225.00 225.00 Reiterates
13 Jun Deutsche Bank Buy 196.75 240.00 245.00 Reiterates
12 Jun Cantor Fitzgerald Buy 196.75 250.00 250.00 Reiterates

Harry, have a look at the INFINIS thread they have today declared a final dividend of 12.2p, which should be paid in August - which at yesterday's closing price @179, gives an interim yield of @6.8% .

This has pinged up on my radar again. Brokers seem to like it and yield is forecast to be over 6% for the next few years. Gently falling PE and EPS growth looking good.
(Off topic.....Skinny, have you ever looked at JLIF? Figures look good...am currently researching.)

I have some of these acquired from 171-181

I was attracted by the dividend, chart for last 10 years and a bottom from the 2011 and 2012 which I didn't expect to be retested.

I don't have my notes to hand right now it's getting beaten up due to weak euro which maybe has started to turn in the right direction over the last few sessions

Premier Farnell plc - Trading statement
Premier Farnell plc ("the Group"), a global leader in the high service distribution of technology products and solutions, today issues a trading statement to update its outlook for the second quarter(Q2) and first half of the current 2015/2016 financial year. The Group's interim results will be published on 17th September 2015.

Following our first quarter (Q1) trading update in June, Group sales per day momentum has slowed significantly, particularly in our North American and UK markets. Group sales growth per day in the second quarter is now expected to be 1.2% versus the 5.4% delivered in the first quarter. Excluding Raspberry Pi, Group sales per day growth is expected to be 0.8% in the second quarter, compared to 1.9% in the first quarter.

Reflecting the trading performance and the impact of current exchange rates, we now expect adjusted operating profit in the first half to be down approximately 10% on the first half of last year. This excludes the impact of a circa £2.0m provision release relating to the successful outcome of a potential legal action. Including the provision release, adjusted operating profit is expected to be approximately 6% down year on year.

Laurence Bain, Group Chief Executive, commented:
"Despite implementing a number of initiatives to drive sales and expand our gross margin, we have been impacted by a slowdown in and a more difficult trading environment since we reported our Q1 numbers. Although we continue to focus on delivering the cost savings identified in our global operating model, given the recent weakness in some of our core markets and prevailing exchange rates, we now expect adjusted operating profits in the second half to be at similar levels to those in the first half (excluding the benefit of the £2.0m provision release).

In light of these challenging trading conditions, the Board has recently commenced a review of the Group's operations and will provide an update on this review in September as part of the interim results announcement."

Oh well - one for the dividend pile for the moment.

StockMarketWire.com
Premier Farnell has booked an H1 pretax profit down 15.9% to £30.6m, from £36.4m. Revenue was £498.6m, from £479.3m. Interim dividend was 2.6p, from £4.4p.

Chair Val Gooding commented:
"The review announced in July is progressing rapidly. One of the key early decisions is to dispose of Akron Brass which, although an excellent business, does not fit strategically within the portfolio given the Group's refocus on its core distribution activities.

"The Board has also given careful consideration to the current shape and capacity of the Group's balance sheet and we have concluded that it is appropriate to rebase our dividend.

"The Board recognises the significance of the dividend to our shareholders, but also the importance of it being sustainable and progressive and we will therefore target dividend cover in the range 1.5x to 2.0x going forward.

"The review has highlighted the extent of change in the business that is necessary to allow it to compete effectively in an increasingly digital market.

"Further work is required to determine the scale, timing, benefits and costs involved, and the Board expects to be in a position to provide this information at the time of its Q3 trading update in December 2015."

Barclays comment:
"While the top-line growth rates reported today are slightly worse than those disclosed in July’s pre-close update, overall 1H operating profit is in-line with the Group’s guidance of -10% yoy. Unfortunately, the outlook for 2H has worsened and revised guidance is for FY operating profit to be between -13% and -17% below last year (July guidance was -7%). Alongside this updated guidance, PFL has announced the following: (1) a 41% cut to the interim dividend; (2) an intention to dispose of Akron Brass; (3) the operational review remains ongoing with work to date “highlighting the extent of change in the business that is necessary” with an update on the scale, timing, benefits and costs involved scheduled for December. Given the shape of the balance sheet, we do not disagree with either the dividend cut or the planned disposal of Akron Brass. Unsurprisingly, given the review was only initiated at the end of July, detail on future strategy is lacking but we welcome the emphasis on focusing on the fundamentals of distribution, something which we do not believe has always been at the heart of Group strategy. Comments on the pricing strategy and a planned revision of Group KPIs indicate to us a further rebasing of margins is likely but the extent of this remains unclear. Assuming a final dividend cut of similar scale to the interim, implies a prospective dividend yield of 4.6%.
Guidance reduced again: Following a weak end to 2Q which has continued into 3Q, management guidance is reduced again from a FY operating profit of £82m to “in the range £73m-77m”. With the statement indicating a need to “realign our pricing strategy”, we make another cut to our gross margin forecasts.
Rebased dividend yields 4.6%: Based on our revised forecasts, PFL trades on a 12m forward PE of 11.5x. While the scale of the downgrade is disappointing coming just 6 weeks after the last update, we believe the initial actions taken as part of the strategic review are sensible and the dividend yield of 4.6% may offer some support ahead of the full strategy update in December. We reduce our target price to 135p, based on a 12m forward PE of 11.8x, a c10% discount to the long-term average reflecting uncertainty over where margins will stabilise, and equating to a 4.5% dividend yield."

StockMarketWire.com
Citigroup has downgraded its recommendation on Premier Farnell (LON:PFL) to sell from neutral, stating that the electronics distributor seems structurally challenged after another earnings downgrade.

The broker added: "Given uncertainty over its ability to deliver sales growth and operating leverage, we feel earnings risk remains on the downside as management struggles to offset ongoing gross margin erosion."

Analysts have lowered their target to 90 pence a share (from 140 pence), which they said was to reflect earnings downgrades, heightened business risk due to Strategy Refocus and structural challenges.

StockMarketWire.com
Premier Farnell said its FY pretax profit has fallen to GBP29.2m, from GBP54.1m. Revenue was GBP903.9m, from GBP886.6m.

Proposed final dividend is 3.6p a share, down 40% on the year. Total proposed for 2015/16 dividend is 6.2p, also down 40% on the year, following previously announced dividend rebasing.

Chairman Val Gooding commented:
"We have commenced implementation of a series of actions in the past year to address a challenging period for Premier Farnell. The operational review has already yielded positive results which we will continue to build on.

"On 16 March 2016, we completed the sale of Akron Brass for $224.2m, enabling the company to reduce its net debt and concentrate on its core activities. We have also rebased the dividend to a level from which we aim to deliver a sustainable and progressive dividend policy.

"Following an extensive global search, we were delighted to announce last week the appointment of Jos Opdeweegh as Chief Executive of Premier Farnell. His strong international experience and track record of value creation provides a strong platform for the next stage of our development."

Anyone have an opinion on whether a counter bid is likely.

I'm currently holding both CSG &PFL in takeover situations wondering what to do with both of them.

If the FTSE goes stupidly low I'll sell CSG for sure but not clear on PFL at all.

StockMarketWire.com
Datwyler Technical Components UK Ltd, a subsidiary of Datwyler Holding AG, has made a recommended 165p-a-share cash bid for Premier Farnell. The cash consideration implied an enterprise value of £792m.

In addition, Premier shareholders on the register on May 27 would remain entitled to receive the FY proposed final dividend of 3.6p a share cash.

The combined group would operate a global Technical Components division with approximately 4900 employees, more than 1m products stocked in warehouses and was expected to generate revenue of about CHF1.8bn.

"Datwyler believes the combination of Datwyler and Premier Farnell represents a strong strategic fit and is highly attractive," it said in a statement.

"Both companies share very similar strategic values and are highly complementary in terms of product range, distribution channels and geographic footprint.

"The Transaction creates a leading high-service electronic components distributor in Europe and the combined platform will enable the Combined Group to realise significant economies of scale compared to Datwyler's standalone strategy, particularly in the context of a large addressable and fragmented high-service electronic components sector worth approximately CHF30-40 billion, in which the top five distributors have a sector share of little over 15 per cent.

"Complemented by efficiency gains from an overlapping cost base, increased capillarity and acceleration of ongoing restructuring efforts on both sides, the Combined Group is also expected to deliver enhanced margins through a low cost structure going forward."

No idea about a counter bid, but nothing has appeared yet, so see no reason to assume anyone else is interested.

Comment from Olivetree:
"Given the presence of activists on the register, and the general underperformance of Premier Farnell stock, the market has often speculated as to a creative outcome for the company. One of the more popular ideas in the last couple of years has been a merger with Electrocomponents (ECM LN). The latter established a new management team only last year, replacing a previous CEO who had run the company for 13 years, so there was hope that such developments could lubricate such a transaction. There were also calls for a break up of Premier Farnell, the pressure was to sell its Akron Brass fire-fighting subsidiary, perceived to be a poor fit with the larger electronics business. This sale was eventually announced in September last year and the details of the sale were confirmed in February 2016. Hence the next step for activists was likely to be consolidation with another industry player – something we are now seeing today.
Datwyler has secured irrevocables from 18.5% of Premier Farnell’s register, from JO Hambro, Majedie and (activist) GO Investment Partners. These irrevocables generally release in the event of an offer from a third party that is only 5% better than the Datwyler offer (ie 173.25p).
It is worth noting that Electrocomponents equity rating continues to look powerful relative to that of Premier Farnell, so a potential merger could continue to make sense. Rumours of such a transaction have never been far from the market, as recently as 9th October 2015 the press reported such speculation. The perception was generally that GO had taken its stake, post two profit warnings from Premier Farnell, in order to engineer such a tie-up. The industry backdrop continues to appear ripe for consolidation, so such a transaction cannot be entirely ruled out, especially given that Datwyler’s irrevocables are released so easily. With a current market cap of £1.2bn, Electrocomponents is much larger than Premier Farnell, although it is still smaller than Datwyler’s £1.7bn market cap. Electrocomponents’ equity currently trades on some 10.8x EV/EBITDA, compared with Premier’s 6.5x, so it does have a powerful acquisition currency, both on a relative and absolute basis."

RBC comment:
Our view: The 165p cash offer compares well with our previous 155p target and given weak trading, historic issues, management change and gross margin pressures, we feel this is a good price, although wouldn’t rule out a counterbid. We downgrade to Sector Perform and increase our target to 165p in line with the bid from Daetwyler.
Key points:
Recommended cash offer – Daetwyler has made a recommended cash offer at a 51% premium to last night’s close of 165p per share, which values the group at £792m. This compares to our prior DCF target price of 155p and equates to a calendar 2016E PE of 16x and EV/EBITA of 12x. Shareholders will also receive the 3.6p final dividend payable on 23 June. Management believes it can extract CHF50-70m (£37-51m) synergies from the deal (50% gross profit and 50% cost).
Decent price – Given weak trading, the history of disappointments, management change, gross margin pressures, and the cycle – we see this as a good price. However, the valuation is below that of key peer Electrocomponents,(2016E PE 20x, EV/EBITDA 16x). The synergy target is a big number for a business that doesn’t have huge overlap, hence we would think that the synergy number for one of the closer peers e.g. Electrocomponents would be larger – indeed we have previously stated that we think £60m could be achieved by a combination with it, although the new management team has plenty on its plate with its own restructuring plans. Mouser and Digikey in the US also have good overlap and a strong dollar potentially to entice them. As such, despite this being a good price we wouldn’t rule out a counterbid.
Q1 Trading weak – PFL has also put out a Q1 trading update – LFL growth was -1.4% down from +0.4% in Q4, with weakness in the UK (-7%) and USA (-9%) offset by Europe (+4.8%) and Asia (+26%). Cost savings do appear to be on track and management has initiated some restructuring in the USA.
Downgrade to Sector Perform – Given our view that this is a fair price, we downgrade to Sector Perform and increase our target price to 165p, in line with the offer. This compares to our previous DCF derived target price of 155p."

hmm. So for a while today this was trading at a penny above 165p cash offer.

I guess I'll hold. Someone always knows something

SUSPENSION OF LISTING AND TRADING OF PREMIER FARNELL SHARES
On 13 October 2016, Premier Farnell announced that the High Court of Justice in England and Wales had made an order sanctioning the scheme of arrangement (the "Scheme") relating to the recommended cash offer by Bidco, an indirect wholly-owned subsidiary of Avnet, for the entire issued and to be issued share capital of Premier Farnell (the "Acquisition").
Pursuant to the terms of the Scheme and Listing Rules 5.1 and 5.3 and following an application by Premier Farnell to the UKLA and the London Stock Exchange, Premier Farnell announces that trading in Premier Farnell shares on the London Stock Exchange's Main Market for listed securities and the listing of Premier Farnell shares on the premium listing segment of the Official List have each been suspended with effect from 7:30 a.m. on 17 October 2016.
Capitalised terms in this announcement (the "Announcement"), unless otherwise defined, have the same meanings as set out in the scheme circular published by Premier Farnell on 19 August 2016.
Next Steps
It is expected that the Effective Date of the Scheme will be today, and that the delisting of Premier Farnell Shares on the London Stock Exchange will take place with effect from 8:00 a.m. on 18 October 2016. Further announcements will be made when the Scheme has become effective and when the admission to listing and to trading of the Premier Farnell Shares have each been cancelled.