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Andor rebuffs 'disappointing' Oxford takeover bid

02 Dec 2013

Board of imaging firm recommends increased dividend while it seeks a higher offer.

Andor Technology’s board of directors has rejected a 500p-per-share takeover bid by fellow UK technology firm Oxford Instruments.

The maker of scientific cameras said in a statement to the London Stock Exchange that having considered the bid and spent time helping Oxford's management to understand Andor's business and its future prospects, it was “disappointed that Oxford Instruments was not able to increase its offer price”.

“The [Andor board] is mindful of its obligations and fiduciary duties to maximise value for [its] shareholders and, therefore, is in the process of fully evaluating the company's strategic alternatives,” it announced.

“These include pursuing its long term stand-alone growth strategy as well as actively soliciting a recommendable offer from Oxford Instruments or any other third parties.”

Increased dividend
The rejection comes after nearly four months of negotiations between the two companies. Oxford first approached Andor in July with a proposal for a 420p-per-share bid, before increasing its offer first to 470p and then 500p following due diligence and recent acquisitions by Andor.

After Oxford confirmed the 500p offer on November 27, Andor has subsequently posted its full-year results - and despite a dip in both revenues and profit chairman Colin Walsh said that the Andor board was now recommending an increased shareholder dividend.

“A final dividend of 2.15 pence per share for the year, up 7.5 per cent on the previous final dividend and which, if approved at the annual general meeting, will be paid on 28 February 2014 to shareholders on the register on 7 February 2014,” announced the firm.

Under London Stock Exchange rules, Oxford now has until 5pm on December 10 to make clear its intentions with an improved bid, or withdraw its offer - although that deadline can be extended with the assent of the LSE's takeover panel.

Sales down; orders up
With reduced government expenditure in research hitting Andor’s principal markets, the latest financial year has turned out to be more difficult than the Belfast company had initially expected.

Sales slipped 6 per cent on the prior year to £54.6 million, with adjusted pre-tax profits down 26 per cent at £7.4 million.

However, Walsh added that with the company’s new sales structure now “bedded in”, there were considerable grounds for optimism in the future. CEO Conor Walsh said that this was the primary reason behind a 5 per cent increase in orders to £59.1 million for the year ended September 30.

“Our year-end order book was up 33 per cent on the same period last year, to £15 million,” he added. “At a macro level, while markets are beginning to show some early signs of recovery, this improved order intake is primarily the result of the restructure of our sales team.”

“Order intake in the last three six-month-periods has grown from £26.6 million to £29.1 million to £30.1 million, and this is the first time since 2010 that the second-half order intake has exceeded the first-half.”

Spinning disks
According to the CEO, Andor’s introduction of the “Revolution WD” microscope, which is based on a Yokogawa spinning disk, has been well received by the market. When coupled with the company’s sCMOS detector, it is said to give users a 22x increase in resolution, combined with a 5x greater field of view and 3x depth of sample analysis when compared with existing technology.

“This performance allows us to compete in the laser scanning confocal market, which is approximately three times the size of our current addressable space,” Walsh noted.

On top of that, Andor’s recent acquisition of US-based Spectral Applied Research brings with it an additional laser spinning disk product known as “Diskovery”, which Andor plans to launch globally over the coming year.

“Having the Diskovery gives us control over a key part of the intellectual property at the heart of our systems, as well as creating the potential to further enhance profitability,” said the firm. Combined with the Yokogawa-based technology, it describes its product portfolio in this area as “second to none”.

Following the company's full-year results, Andor's stock price initially rose by more than 5 percent to trade at 510p - just above the level of Oxford's latest offer.

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