Berenberg lowers Cobham to 'hold' as shareholders question Advent's bid
Analysts at Berenberg lowered aerospace and defence manufacturer Cobham to 'hold' on Monday after its shares began trading 1.7% above a cash offer made by Advent.
Aerospace and Defence
10,971.25
09:25 24/04/24
Cobham
164.50p
14:03 17/01/20
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09:25 24/04/24
FTSE 350
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09:25 24/04/24
Buoyed by reports that Cobham's largest shareholder believes Advent's 165p per share, £4bn cash offer undervalued the business, shares headed north of the initial offer.
Berenberg felt that particular view had perhaps been bolstered by Cobham's strong first-half performance, reported alongside the offer announcement, which indicated that its turnaround strategy was ahead of plan.
"We certainly see longer-term value potential for Cobham and while we do not rule out that a higher bid may emerge, the buyer is not obvious given the diverse nature of the group," said Berenberg.
The German bank said that, on balance, it believes the unanimously backed deal will go ahead, with "modest potential for a higher bid and slightly less risk that the deal could collapse".
"We reflect this in our 170p price target (equivalent to a 2020E P/E of 23x and EV/EBIT of 15.7x) and move to a 'hold' rating, happy to lock in the bid price."