Chemring Plc, which received a preliminary approach from Carlyle Group LP, dropped in London trading as investors saw a cut to this year’s profit target reducing any offer for the maker of missile-avoidance systems.
The company fell as much as 13 percent to 322.3 pence, its lowest level since announcing Carlyle’s interest on Aug. 17. Problems with a cost-management system and delays to the debut of an explosives clearing device will lower earnings by 15 million pounds ($24 million), Chemring said in a statement.
“Carlyle would have been unaware of the problems in their initial approach,” Credit Suisse analyst Oliver Sleath said in a note. “We think this would be more likely to result in a lower price for the bid, than affecting the probability of the takeover going ahead.”
Chemring’s order book shrank 9 percent at the end of July from a year earlier because of the slow approval processes for export licenses in many European countries and the early timing of Ramadan and its impact on Middle East bookings. Overall, quarterly sales advanced 4 percent.
The Fareham, England-based company traded at 325.3 pence as of 9:09 a.m. local time.