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Kentz Corporation Limited Soars Following Bid Approaches

The shares of Kentz Corporation (LSE: KENZ) rallied 114p, or 24%, to 590p  during early trade this morning after the engineering services group confirmed it had received two indicative offers.

Kentz revealed that AMEC (LSE: AMEC) had submitted a “highly conditional and unsolicited” proposal last week, while M+W Group, a subsidiary of the Austrian Stumpf Group, had presented an offer during July.

Kentz said the proposal from AMEC valued its shares at between 565p to 580p in cash, while the deal from M+W was at a “lower indicative value“.

Kentz stated it had reviewed AMEC’s proposal and concluded that it undervalued the company and had rejected the approach. Kentz also said it was not considering the offer from M+W.

AMEC said this morning that it believed its offer represented a “highly attractive opportunity” for Kentz shareholders.

M+W said it was “still considering its options, which may or may not result in a cash offer being made for Kentz“.

Kentz claimed today it had “a clear and realisable strategy to create further shareholder value as a standalone entity“. The company floated during 2008 and since then, revenues have advanced from $677m to $1,563m and profits have climbed from $42m to $119m.

Prior to today, City experts reckoned Kentz would deliver earnings of about 44p per share for 2013, which would mean a possible 580p per share offer would place the group on a P/E of 13.2.

Of course, whether that rating and the chance of a higher bid currently makes Kentz a ‘buy’ remains something only you can decide.

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> Maynard does not own any share mentioned in this article.