Carlyle Group LP has been granted an extra month to consider making a bid for Chemring Plc, implying talks with the maker of munitions and aircraft protection-equipment are progressing.
A new Oct. 12 so-called “put up or shut up” deadline has been put in place by the U.K.’s takeover panel, Fareham, England-based Chemring said today in a statement.
Chemring received an preliminary approach from Carlyle on Aug. 17, boosting its share price as high as 414.70 pence to value the company 801 million pounds ($1.3 billion). A cut to this year’s profit target on Aug. 28 and concern that a bid may not materialize has caused Chemring shares to retreat to levels just above their trading range before the private equity firm’s interest surfaced.
“The announcement suggests Carlyle is still seriously interested, following the profit warning,” said Oliver Sleath, a London-based analyst at Credit Suisse. “So far, the stock price has reflected market doubts over the likelihood of an offer being made.”
Chemring climbed 4.2 percent to 341.2 pence in London trading as of 8:19 a.m., outpacing a general rise in stocks following the Federal Reserve’s pledge to buy mortgage-backed securities to encourage economic growth.
The negotiations are taking place against a backdrop of European Aeronautic, Defence & Space Co.’s planned combination with BAE Systems Plc, which would be the industry’s largest to date. European defense spending cuts have set the stage for a wave of mergers to adjust to the new reality. Carlyle’s existing investments include aerospace software company Arinc and Vought Aircraft Industries.
Carlyle had until today to declare a bid or seek the extension.
“There is no certainty that, at the end of this period, an offer for Chemring will be made, nor as to the terms of any such offer,” the company said, adding that a further extension of the deadline is possible.