Oxford Instruments jumps on possible takeover by rival Spectris

Shares in Oxford Instruments, the UK high-tech equipment maker, surged 30 per cent on its plans to accept a potential cash-and-shares offer from rival Spectris that would create a FTSE 100 group with a market capitalisation of about £4.5bn.

Oxford Instruments, which manufactures X-ray tubes, optical imaging and microscopy tools, has received a takeover proposal from Spectris to pay £19.50 in cash and issue £11.50 of new stock for each share in the Abingdon-based group, the London-listed companies said on Monday.

The offer would be a 35 per cent premium to Oxford Instruments’ three-month average share price, valuing it at roughly £1.8bn, and Oxford’s board has indicated that it is minded to recommend accepting the offer.

Spectris, which manufactures specialised sensors and testing equipment for markets such as scientific research, industrials and pharmaceuticals, said the deal would lead to “significant synergies”.

The company’s chief executive Andrew Heath, who spent 30 years at Rolls-Royce, said that the takeover would create a “UK champion” in the high-tech instrumentation sector.

“A combination of Spectris and Oxford Instruments would bring together two highly complementary businesses and create a leading global player in precision measurement,” he said.

Shares in Spectris closed 9 per cent lower following the announcement of the deal, while those in Oxford Instruments surged 30 per cent higher.

Physicist Martin Wood founded Oxford Instruments with his wife Audrey in their garden shed, after constructing the first superconducting magnets, used in MRI scanners and particle accelerators, outside the US. It became Oxford university’s first substantial commercial spin-off in 1959 and last year had revenues of £318mn.

Wood passed away in November and his estate holds 5 per cent of the company.

The deal marks a rare takeover between two London-listed groups in an era of private equity buyouts of British companies in the wake of the pandemic.

Since a proposed takeover of Spectris by Bain and Advent was spiked in 2018 because of Brexit-fuelled market turmoil, the Egham-based engineering company has made a series of divestments to become more focused in highly profitable areas.

Investors had hoped that Spectris might use its cash pile for payouts but it signalled earlier this month that it would spend it on acquisitions.

Anthony Plom, an analyst at Berenberg, said that the takeover made strategic sense but investors on either side of the deal could be unsatisfied about the price tag.

“I’m not fully convinced this goes through,” he said.

Spectris is required to make a formal offer or drop its pursuit of Oxford by March 28.


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