Kunick set for £120m MBO
Shares in Kunick, the company that runs 45,000 fruit machines for the pub trade, jumped 18 per cent yesterday on the news of a potential management buy-out.
The bid, led by chief executive Colin Daniels and backed by private equity firm Electra Partners Europe, is believed to be worth about £120m.
The company also runs leisure centres. It is thought that if the management is successful, it will sell this off to focus on its amusement machines arm.
It is believed any offer would be in the region of 17.5p a share. That would value the company at £39m. Any buyer would have to account for Kunick's debt of about £40m. Paying off preference shares would take the total enterprise value to £120m.
Yesterday the shares rose to nearly 17p, a 12-month high and well above the year's low of 10p.
The company issued two profit warnings in the space of a month, in 2000. The shares fell from 35p and have traded flat for the months since.
The warnings led to the departure of chief executive Russell Smith after a three-year tenure. Mr Daniels moved into the top job from head of the amusement machines division.
The company has not had the best of it, in recent times. Leisure Link, Kunick's main rival in fruit machines, last year received a £200m injection.
The loss of a Scottish & Newcastle contract believed to be worth five per cent of annual sales was also a blow.
But analysts are forecasting profits for the year to September to rise to £9m compared to £8.6m, on sales of £170m, last year.
The City believes that if the buy-out is successful, £120m will represent a cheap deal.
