Dull business but cracking chart, great dividend and ad hoc takeover rumours. I'm happy to settle for that kind of dull!

LONDON (AFX) - Speculators had a crack at Fenner, 3 pence firmer at 145-1/2, amid talk that Brown Shipley has received a 160 pence-a-share offer from a cash-rich US conglomerate for its 11.4 pct stake in the conveyor belt manufacturer. Traders say that, in the event of a full-blown bid for Fenner, a take-out price would have to be north of 200 pence.

This is from the end of last week. Looks exciting and if events head in a bid direction my prediction of 220p may not be too far wrong. Now wouldn't that be nice!

A new high - go on my son!

LONDON (AFX) - Global engineer Fenner PLC said it plans to raise 54.1 mln stg in a placing and open offer at 127 pence per share to fund the 44.6 mln stg agreed bid for Wellington Holdings PLC, announced today.

The offer for Wellington is on the basis of 123 pence in cash plus 0.456 new Fenner shares, valuing each Wellington share at 185 pence. Alternatively, Wellington shareholders may elect to receive a full cash alternative of 180 pence for each Wellington share.

Fenner has received irrevocable undertakings and letters of intent to accept the offer in respect of 15,431,094 Wellington shares in aggregate, representing approximately 64.67 pct.

Fenner also released results today for the six months to Feb 28 2005 which showed pretax profit more than doubled to 3.6 mln stg from 1.6 mln a year earlier. It said the outlook is positive and volumes remain strong in most major markets.

Fenner said that with the purchase of Wellington, the enlarged group offers the potential for technical synergies, cost savings and an attractive platform to acquire other international businesses.

Wellington and Fenner have also been exploring the possibility of establishing a joint venture in China, which would enable Wellington to exploit emerging opportunities for its products in the energy markets.

In addition, the Fenner directors believe the acquisition of Wellington to be a low risk expansion opportunity for Fenner as the Wellington Group's sales are well diversified geographically, which the Fenner directors consider provides protection against a downturn in any one territory.

The Fenner directors said they believe that the acquisition, taking into account the full effects of the placing and open offer, would be earnings enhancing in the first full year of ownership.

The Fenner board also said today that it is in early discussions with a number of potential acquisition targets, but there is no certainty that any of these potential acquisitions will be successfully concluded.

The improved balance sheet strength and scale of Fenner after the acquisition of Wellington together with the maximum net proceeds of the Placing and Open Offer of approximately 19.6 mln stg would enable the Fenner Group to actively pursue its acquisition strategy, it said.

Queen,
Just got my letter with details of the open offer. What do you think? Opinions anyone?
Cheers,
IN

ironnick - I still think that FENR is ripe for being gobbled up (probably by an American firm) and whilst waiting for that, the underlying business seems to be going from strength to strength. I for one will be taking up my offer.

Queen,
Many thanks for your prompt reply. I'm inclined to see it your way as well. I was going to take up the offer anyway, but it's nice to have an opinion confirmed.
Many thanks,
IN

Queen,
Sorry, I forgot to ask. I don't suppose you've seen any comment re the offer in IC or Shares? I was wondering what their take on it was?
IN

Hi ironnick, no I've not seen anything in either publication but would expect something in the Shares "Special Situations" section this coming week. Good luck with your holding!

Queen,
I didn't see anything in the special situations of Shares. The seemed neutral overall, but positive on future orders, which they couldn't see slowing down. They seemed to think the the $: exchange rate might be affecting them. I didn't see the IC.
IN

Thanks ironnick. There were a lot of holds & sells in this week's Shares mag, far more than usual. They seem happy to be following the market down at present.

Queen,
Not sure if you saw this on the other thread. It strikes me that you could top up a slightly cheaper if you didn't take up the offer. I have edited the post to make it a bit clearer.
"I have got rights at 127p; but 3 for 7 is a big capital ask. Fenner is a solid unspectacular yield play, so I am a little suspicious about a business that distributes a load of money in divis and then asks for it back. If nothing else (unless held in an ISA) this is tax inefficient, and smacks a little of poor forward planning. At the moment, I am not inclined to participate. I am therefore inclined to hold and see how price develops, but not to take up the offer."
IN

Interesting. I do actually hold these in an ISA but bought for the takeover potential, as well as the solid growth and good dividend. DYOR etc and each to their own :-)

I'm really surprised that no-one else is interested in this baby: it's got strong growth, a cracking dividend and an increasing exposure to the Chinese market. a winner on all counts with a rising sp!

Is anyone still in this ? Im thinking about it and would appreciate anyone elses views.

Cheers

QUEEN 1, I agree wholeheartedly.

EVILRATBOY, if you are not already in this stock. I would advise you to buy on any market correction that takes its share price below 1.80p. This a fast growing stock directly linked to the China's commodity and railway industries so its profits will continue to increase for several years. I have held them from 1.17p and will continue to do so unless China falls into a very serious recession.

Anybody else in FENR at present?

Any interest ..?

I've just been reading Fenner's preliminary results from november. I'm not great at understanding results so I may not be analysing it correctly. I like the dividend which is currently at 9%. They've increased it this year which suggests confidence. But I was a bit troubled by the amount they spent in acquiring companies this year. Long term it may be great but to pay for this their net debt at the end of the year is (according to page 14 of the results) 97.6 million from 36.3 last year.. They had an institutional placing earlier in the year I think when the price was much higher. This level of debt might be fine and quite manageable but some of it comes from bank loans from what I understand, that concerns me in case the banks decide to change the rates of these loans.

"Fenner PLC, the global engineer specialising in reinforced polymer technology, will be announcing its interim results on Wednesday 29 April 2009."

FT tipping this as a bombed out share with good potential, based on the assumption that all the bad news has now been factored in to the sp. Even disappointing results may not take the sp down much further.

Correction. One of the private investors who writes a column for the FT Weekend is tipping Fenner.