Under the proposed terms, Spectris shareholders will receive £37.63 per share in cash, comprising £37.35 per share in cash consideration and an interim dividend of 28 pence. Advent confirmed that shareholders will also receive the final dividend for the 2024 fiscal year without a reduction in the cash offer.
The transaction is to be implemented via a court-sanctioned scheme of arrangement and remains subject to shareholder and regulatory approval. Completion is anticipated in the first quarter of 2026. Spectris intends to unanimously recommend the deal to its shareholders.
Premium bid lifts shares
The offer represents an 85% premium to the company's share price on 6 June, the day before Advent’s approach became public. Following the announcement, Spectris shares rose 15%. Nevertheless, they remain down nearly 20% from their peak of 4,167 pence in September 2021.
Spectris has been viewed as a potential acquisition target for some time, particularly after streamlining its portfolio and trading at a discount to US peers. The group, listed on the FTSE 250, has become the largest takeover target in Britain this year due to its relatively low valuation.
In parallel, Kohlberg Kravis Roberts & Co. (KKR) has indicated it is continuing with due diligence and financing arrangements for a potential rival offer. KKR, which made its initial approach on 2 June, has encouraged Spectris shareholders not to take any action regarding the Advent offer. The private equity firm remains in advanced stages of engagement but noted there is no certainty a formal proposal will be made. KKR has until 11 July to submit a firm bid under UK Takeover Panel rules, while Advent faces a deadline of 7 July.
Spectris previously rejected two proposals from KKR, including the latest made on 13 June. While the company has not disclosed the terms of KKR's proposals, it has confirmed constructive engagement continues.
Strong foundations despite slowdown
Founded in London, Spectris provides high-tech instruments, test equipment and software to industries including pharmaceuticals, steel and automotive. The group operates across 36 countries and has made several acquisitions, including Micromeritics and SciAps in August 2024. These integrations are expected to drive significant profit growth in 2025.
In April 2024, Spectris sold Red Lion Controls for $345 million. The company has forecast that its Profit Improvement Programme will yield savings of approximately £30 million in 2025, with a run-rate of £50 million in 2026.
However, Spectris reported a decline in like-for-like sales for the first quarter, with revenues down 3.4% year-on-year to £299 million. Excluding acquisitions, sales fell 8%, with all regions showing a year-on-year decline. Asia dropped 7%, Europe 6%, North America 10%, and the Rest of the World by 15%. The downturn was attributed to weaker demand and economic uncertainty.
Despite this, Spectris ended the first quarter with a strong order book of £529 million, up 4% at constant currency compared to December, and reaffirmed expectations for strong adjusted operating profit growth in 2025.
Chief Executive Andrew Heath stated that the combination of cost savings and contributions from recent acquisitions would provide more than £60 million in incremental profit in 2025. Spectris also anticipates being able to mitigate the impact of US trade tariffs, noting it remains prepared to address any indirect effects.
The potential sale marks another significant blow to the London stock market, which has seen several major firms acquired or opt for foreign listings amid subdued IPO activity.
