The board of specialist contractor Van Elle (VANL) has agreed a takeover by Austrian group Strabag at a 58% premium. Shares in AIM-listed Van Elle jumped 55% to 51p in response.
Strong strategic fit
The all-cash deal is pitched at 52.3p per VANL share against a closing price last night of 33p, valuing the company at £58.8 million. Strabag is acquiring the firm through its UK subsidiary which already has an established position in ground engineering.
Van Elle’s main business is infrastructure-related, providing services like open site piling, ground improvement and stabilisation. It is contracted by larger firms such as Kier Group (KIE) and Galliford Try (GFRD) who rely on its geotechnical expertise.
Examples of works include the A417 Missing Link in Gloucestershire and the North & East Melton Mowbray Distributor Road in Leicestershire. The firm also provides services to housebuilders such as Persimmon (PSN), ensuring sufficient foundation support for residential developments.
The strong strategic fit between Van Elle and Strabag UK will increase the market opportunities for both firms. Complementary client relationships and end markets, particularly in the residential, water, energy and transport sectors, should also create attractive cross-selling opportunities.
Van Elle is a prime example of the ‘value opportunity’ in the UK small- and mid-cap space. Unfortunately, it’s taken an industry insider to realise that value, and another attractive, well-run UK firm has been swallowed up.
Management had made big strides in recent years to make the business more resilient and less cyclical. However, that wasn’t reflected in the share price, which fell sharply post-Covid and never really recovered.
The firm conceded its share price was ‘unlikely to reflect fundamental value of the group’ given the lack of illiquidity and poor investor sentiment towards smaller UK-quoted companies.
Moreover, it called the cost and resources required to maintain a stock market listing ‘excessive’ for its size and ‘detrimental’ to its performance and focus. Investors, and the London Stock Exchange, ought to be taking notes.
Read the press release here: https://www.van-elle.co.uk/tag/investors/
