Ambitious companies are looking at acquisition opportunities. Acquisitions can be bad for consumers if they aim to erase competition or acquire innovative ideas from start-ups.
However, motivations are not always exclusive. Swallowing your rivals and creating stronger entities with bigger reach is more of a strategy. That was the mindset behind Volex’s attempt to buy small rival TT electronics late last year.
The two businesses have many things in common. Both have a wide supply of electrical components and applications, have a background in traditional manufacturing, have moved to new markets over the years, and have expanded production and sales internationally.
However, Volex, which has a healthy appetite for acquisitions, outperforms TT Electronics. The latter tackles a series of macro challenges in recent years and a production setback in US operations. However, the shortage company refused a bid of £250 million.
Many companies reject unnecessary suitors and believe they can solve their problems. Minor Anglo-American rejected a bid from BHP and reconstructed itself. Property Portal RightMove declined several bids from Australian company Rea. Retailer Curries refuted to make every effort to take over it last year, increasing its strength. Engineer Wood Group has previously declined bids. This included one offer of £1.6 billion and preferred to overhaul myself instead. However, the event overtook it and this week accepted a £242 million bid and funds to pay off the debt.
TT Electronics continues to try to turn things around, but the issues continue, and tariffs are the new spanners for the work. If you pull that apart, the stock has many upside potential, but during that time you can’t rule out any further bid speculations.
Hold: TT Electronics (TTG)
The stocks were hit hard by Trump’s tariff plans, Arthur Sants wrote.
TT Electronics may have regretted its decision to reject the acquisition offer from Volex, and evaluated it with a share of 135.5Pa. At the time, this was well below the historical average of various metrics, with brokers predicting a strong recovery after a difficult period. However, the board did not know that the tariff war was nearby.
The company manufactures electronic components such as sensors and fuses and sells them to industrial manufacturers around the world.
Tariffs are not good news given this. Under “concerns,” the company said the introduction of US tariffs has led the board to “not believe they can’t meet contract tests in certain extreme scenarios.”
This is off the back of an already tough year. In the year ending December 2024, adjusted revenues fell 15%, while higher supply chain inflation reduced operating profit by 21% to £37.1m. The board then suspended its final dividend.
North America was a particularly big hit, with revenue falling 17%. Management said it had risen 10% last year, but there would not be any meaningful revenue growth in 2025. This was a kind of silver lining, but said tariffs would hinder the recovery.
Europe is the most promising region. Organic revenues rose 14% due to aerospace and defense demand. Orderly intake is “strong” and revenue growth is expected in 2025. And now, Europe appears to be the most powerful market, thanks to the promise of German debt bonds and increased spending on defense.
The company is currently valuing its net worth lower. This may seem very dark, but at this value there are cases in favor of European business. However, there is a risk of value laps and we intend to reduce our losses.
Purchase: Whsmith (SMWH)
The company wrote down the value of its high street assets, Michael Fahe wrote.
Whsmith may have been trading on British highways for over 230 years, but the recently announced exit appears to be the right move for all involved.
For some time, it is clear that management has devoted more time and effort to a more profitable travel business than the 480 powerful high street chains.
This is reflected in what is likely to be the final set of results before the business is offloaded to private equity company Modella Capital, and the price it pays for the business.
The £76 million headline figure featured in the sale announcement announced that it would likely only receive around £25 million if the separation and transaction costs were taken into account. In addition to some of these expenses, an impairment loss of over £60 million related to the High Street business is why retailers suffered a pre-tax loss of £42 million in provisional results compared to profits of £28 million last year. The underlying pre-tax profit remained flat at £44 million, in line with expectations.
Management can point out the ongoing misperformance of high street arms as justification for sales. The division’s revenue fell 7%, while the travel business revenue rose 6%. In terms of trading profits, the travel business rose 12% to £56 million, but that on High Street, fell by about a third to £15 million.
As analysts pointed out when the analysts were announced last month, management spent about half of their profits on businesses that only generated about a fifth of the group’s profits, so this disposal allows them to focus on growth opportunities.
The High Street business should also benefit from more committed operators, but once the transaction is completed, there will be less future concerns for investors. Once that’s done, Whsmith’s margins improve and its balance sheet looks a bit daunting.
Stocks that have been immersed in investors in post-deals fear that a more belligerent US administration can block tourists and should ultimately be revalued from the current level of forecast revenues for just nine broker Peel Hunts.
Hold: Everyman Media (Eman)
While pre-tax losses are growing, market share is rising, Christopher Akers writes.
Everyman Media provided a more positive message about future transactions along with annual results after the January profit warning, but pre-tax losses for premium cinema operators trading on AIM were the worst since 2020 due to cost pressure and interest.
This year’s deal was off to a good start as Bridget Jones: Mad a Boy drew on the punter. Chief Executive Alex Scrimgeour said “confident in (a) strong performance in 2025, backed by a well-balanced, consistently step-by-step film slate.”
Annual results were predicted as expected after receiving inadequate January updates. As a result, the group flagged the weak fourth quarter due to low-performing joker Folieà deux and low spending per capita.
Adjusted cash profits remained flat at £16.2 million due to increased wages and the impact of higher utility bills, but the underlying demand showed signs of strength despite the impact of knock-ons on the release schedule for the 2023 US writer strike.
Admissions rose 15% to 4.3 million, supported by the openings of three organic venues over the period, with membership growing by over 65% to around 56,500 people. Market share has improved by 13% to 5.4%.
Everyone continues to expand. A new Brentford cinema will open in March, with the Bayswater site opening in the third quarter.
What you should see is the shares owned by Blue Coast Capital. Private equity investors currently own more than 29% of their stock, increasing the prospects of potential offers.
Everyman trades just seven times in its 2026 revenue forecast from house broker Canaccord Genuity. The stock has lost more than half its value since it was listed in 2013, but its current level looks unfair.
