Spectris Stock Surges 60% Following Advent International’s Acquisition Proposal

Spectris, a prominent UK industrial technology firm, is set to be acquired in a deal valued at £3.75 billion by Advent International, a US-based private equity firm.

The announcement caused Spectris shares to skyrocket by over 60%, marking a significant turnaround for the company that has faced declining stock performance for the past year and a half.

Advent International’s offer stands at £37.35 per share, representing an increase of more than 80% from the £20.38 closing price of Spectris shares the previous week. In light of this generous offer, the Spectris board stated that it is “minded to recommend unanimously” the proposal to shareholders.

Advent International, which has a reputation for acquiring undervalued UK companies, has a history of restructuring them for profitability. Over the last six years, it has invested £6.6 billion in acquiring significant FTSE 250 firms, including Cobham and Ultra Electronics, leading to considerable divestitures.

In its market announcement, Spectris confirmed Advent’s cash offer of £37.35 per share and pledged to fulfill its existing commitment to pay a predetermined dividend of 28p to shareholders.

The company noted that the deal is contingent upon meeting various standard pre-conditions, such as the completion of due diligence and the finalization of transaction documentation.

As a leader in high-tech instrumentation and testing solutions, Spectris has already initiated the due diligence process for the potential acquisition.

In a previous attempt to expand, Spectris proposed a merger with Oxford Instruments four years ago to create a £5 billion entity specializing in magnetic resonance imaging scanners for healthcare. However, that deal collapsed amidst the market turbulence resulting from the Russian invasion of Ukraine.

At one point in late 2021, Spectris shares were valued above £40. However, dwindling revenues and profits over the past three years saw the stock halve in value. The shares plummeted to as low as £15 during the recent market fluctuations tied to trade conflicts.

As of Monday, Spectris shares ended the day up £12.26, or 60.2%, trading at £32.64. This figure still falls short of the Advent offer, suggesting there may be some skepticism among investors regarding the successful completion of the acquisition at the proposed price.

JP Morgan analysts remarked that many investors have increasingly viewed Spectris as a likely acquisition target, especially after the firm streamlined its portfolio while trading at a discount compared to its US counterparts.