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Carlyle Said to Keep Circling Chemring After Repeat Profit Miss

Carlyle Group LP (CG), the U.S. private equity firm, is still in pursuit of Chemring Group Plc (CHG) even after the U.K. maker of aircraft protection equipment repeatedly cut earnings targets, two people familiar with the talks said.

Negotiations that were first made public on August 17 continue ahead of a November 9 deadline set by the U.K. Takeover Panel, said the people, who asked not to be named because the negotiations are private. The date to submit a more comprehensive takeover document has already been extended twice.

The private-equity firm is still interested even after the surprise departure of the Chemring chief executive officer last month and a lowered profit target, one person said. Carlyle has yet to decide if it will bid or work with Chemring to seek another extension, said the people. Chemring’s new CEO, Mark Papworth, takes office on Nov. 5 after the ouster of David Price.

Oliver Sleath, a London-based analyst at Credit Suisse, said the renewed revision “reduces any remaining likelihood of a successful bid” by Carlyle.

Chemring fell as much as 61.1 pence, or 19 percent, to 252.6 pence in London today, the most in more than a decade. The company, based in Fareham, England, cut its target for earnings per share for the 12 months through October by 13 pence, the second reduction since Carlyle said it’s exploring a takeover. The stock traded at at 259.8 pence at 3:53 p.m. in London, valuing Chemring at 462 million pounds ($745.6 million).

Chemring blamed today’s revision in part on development snags with a countermeasure systems, which needs re-testing before it’s accepted by the customer. The company also said several Middle East contract bookings were delayed. Spokesmen at Chemring and Carlyle declined to comment.

To contact the reporters on this story: Robert Wall in London at rwall6@bloomberg.net; Aaron Kirchfeld in London at akirchfeld@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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