Devro revenues grow, FY trading seen 'slightly ahead' of internal expectations

25th Nov 2022 08:31

(Sharecast News) - Sausage-skin and food casings maker Devro has recommended a cash offer from German firm Saria that values the group at an enterprise value of £667.0m - a 65% premium to Thursday's closing share price of 192.0p

Under the terms of the deal, Devro shareholders will be entitled to receive 316.1p in cash for each share held from indirect subsidiary Saria Nederland - Bidco. In addition, Devro shareholders will be entitled to receive and retain the 2.9p cash dividend declared on 2 August.

Devro stated the offer reflected the strength of the business, and its medium-term prospects, and also recognised "the substantial improvements" made to the company through the "successful implementation" of its growth strategy.

"A very generous takeover deal has been tabled for sausage skin maker Devro, pitched at a 65% premium to last night's closing market price. The 316.1p takeover price put the shares back to levels not seen since 2015," said AJ Bell's Russ Mould.

"Devro has been plagued by profit warnings over the years, but it's had a habit of bouncing back. While its latest half-year results showed profits slipping, the company was confident about the full year."

Elsewhere, Devro said on Friday that it had "traded strongly" in the four months ended 31 October, with reported revenue growth hitting 16% year-on-year.

Devro said constant currency revenue growth was driven by higher pricing, successful recovery of inflation, as well as good volume increases led by its mature markets.

The London-listed firm stated volume growth continued to reflect the "successful execution" of its strategy, while operating margins in the period were up year-on-year and "well ahead" of those achieved in the first half.

Devro added that mature markets were "strong", with continued growth in North America and Continental Europe, while emerging market growth was "particularly strong" in the Middle East and Africa, and South East Asia. However, as expected, Devro said the termination of sales to Russia impacted overall progress for the region.

"Current trading and the full-year outlook are slightly ahead of the board's expectations, underpinned by a robust performance and foreign exchange tailwinds," said Devro.

"We look forward to 2023 with confidence, whilst remaining alert to global supply chain challenges and ongoing inflation pressures."

As of 0910 GMT, Devro shares surged 60.42% to 308.0p.

Reporting by Iain Gilbert at Sharecast.com