Chemring shares jump after Bain Capital makes bid
Bain Capital, one of the world’s largest private equity firms, has reportedly launched a takeover bid for defence group Chemring.
Sky News’ Mark Kleinman first reported that Bain has made at least one proposal to acquire the FTSE 250 group, which is used by Elon Musk’s SpaceX
Shares in Chemring jumped as much as 13 per cent to 400p on Monday as news of the offer broke.
According to Sky, one source said an initial offer of 390p-a-share had been proposed, a substantial premium compared to the 356p the stock traded at before the bid was publicised.
The source also added that Bain was preparing a second offer, though it was unclear whether it had been submitted.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: ‘’Despite the robust outlook for defence stocks amid a fracturing of global relations and the expectation of higher military spending ahead, it’s been a volatile year for Chemring.
“They are still 40% below the peak reached in 2010.
“Bain clearly sees significant demand ahead for the components it manufactures which are used in missile systems amid the ramp up of military spending, and right now looks tenacious in its attempt to acquire the company.’’
Defence sector expecting a boom
Chemring, which has a workforce of roughly 2,700 people, provides products and services to the aerospace, defence, and security markets. It also provides services for NASA and Elon Musk’s SpaceX.
The defence sector is expected to boom due to increased spending brought on by President Donald Trump’s return to the White House.
After Trump demanded NATO pull its weight in defence funds, and amid increased hostility from the Kremlin across Europe, there remains an expectation for defence funds to increase.
Dan Coatsworth, investment analyst at AJ Bell, said: “It increasingly looks like governments will spend more money on defence and that makes companies like Chemring attractive to cash-rich private equity firms.
“Chemring is not cheap based on near-term earnings forecasts but someone taking a long-term view might think it still offers good value based on what it might earn years down the line.”
“The big test will be whether the UK government allows a sale of a UK defence firm to a US investment group, particularly if there are concerns from national security perspective,” he added.
Despite reporting a record annual order book of £1.04bn for the year ending in October, Chemring’s shares have struggled over the past year.
Its shares sank 13 per cent in December after it posted its results, as problems at a US plant overshadowed growth forecasts.
The takeover bid comes amid uncertain waters for the London Stock Exchange, which has suffered continuous snubs and overseas takeovers in the last year.
In December 2024, the ‘Czech Sphinx’ billionaire Daniel Křetínský had his takeover of the Royal Mail approved by the UK government, in a deal worth £3.6bn.
Elsewhere, challenger bank Monument is said to be eyeing flotation in the US, in another hit to the London market’s attractiveness.