Broker snap: Another bid looking likely at De La Rue

17th May 2011 12:12

UBS upgrades banknotes and passports printer De La Rue to a 'neutral' rating, from 'sell', on the increasing likelihood of another bid from French technology company Oberthur.In January, Oberthur said it would not make an offer for the company following De La Rue's swift rejection of a 935p-a-share bid. Even so, the group is restricted from bidding until 24 July.However, after press reports that the French company may sell a 60% interest in its smart card business (with a suggest value of €1bn for 100%), UBS believes that this would "clearly go some way to easing financing concerns on a bid...[leaving] Oberthur a significantly smaller business, and given a stated aim to grow its banknote business, another bid for De La Rue is quite possible in our view," said analyst Alex Hugh.While recognising the increasing probability of a bid (at around 1,030p a share), the broker raises its target price significantly, from 565p to 800p.---BC