Sterling Investment Report #001
Key Takeover News, Earnings Reports, and Strategic Updates from the UK Market
This week’s agenda:
Restore plc (RST): Positive Trading and Strategic Acquisitions Fuel Growth
Volvere plc (VLE): Strong 2024 Results Driven by Shire Foods, NAV Jumps
Renew Holdings plc (RNWH): HY25 Diversification & Strategic Shifts Drive Growth Despite Rail Headwinds
Warehouse REIT PLC (WHR): Update on Blackstone Takeover Talks, PUSU Deadline Extended
Conduit Holdings Ltd (CRE): Q1 Growth, New CEO, Shareholder Returns & Catastrophe Impact
H&T Group PLC (HAT): Agrees to £297M Takeover by FirstCash
Kinovo PLC (KINO) – Recommended Cash Acquisition by Sureserve
Assura PLC (AGR): PHP Tables Competing £1.68bn Offer, Challenging KKR Consortium
Restore plc (RST): Positive Trading and Strategic Acquisitions Fuel Growth [SP: 252.5p, MC: £342M]
Positive Start to 2025 & Confident Outlook: Restore plc reported increased revenues for the first four months of 2025, driven by core services, and the Board remains confident in achieving full-year profit growth expectations across all divisions.
Strategic Acquisitions Enhance Growth: The company accelerated its growth strategy by acquiring Synertec (Holdings Ltd) for £22 million to boost document management, particularly for the public sector.
Datashred Division Strengthened: Two bolt-on acquisitions in April 2025, Shred-on-Site (£7.9 million) and Shred First UK (£0.3 million), expanded the Datashred division, with Shred-on-Site expected to add c.£3.5 million to revenue in the remainder of 2025.
Next Update: The Group will publish its half-year results, providing further details on performance and integration, on Tuesday, July 29, 2025.
Volvere plc (VLE): Strong 2024 Results Driven by Shire Foods, NAV Jumps [SP: 2100p, MC: £46M]
Stellar Profit Growth: Volvere reported a 74.2% increase in Group profit before tax from continuing operations to £6.34 million for the year ended 31 December 2024, with revenue up 14.2% to £49.04 million.
Shire Foods Shines: The excellent performance was primarily driven by its 80%-owned food manufacturing subsidiary, Shire Foods, which saw its own profit before tax (and intra-group charges) rise by 59.8% to £6.17 million on revenues of £49.04 million.
NAV & Shareholder Returns: Consolidated Net Assets Per Share (NAV) increased by 16.0% to £17.20, complemented by £1.51 million in share buybacks during the year.
Robust Financial Position: The Group ended the year with a strong balance sheet, holding £27.84 million in cash and available-for-sale investments, providing significant capacity for future investments.
Acquisition Focus & Outlook: Volvere is actively seeking new acquisition opportunities, particularly in the food sector but remains sector-agnostic, and expresses confidence for a robust performance in 2025 despite acknowledging cost pressures.
Capital Allocation Policy: No dividend was declared, consistent with the company's policy to reinvest profits or buy back shares; management highlights ongoing challenges from higher employment and supply chain costs.
Renew Holdings plc (RNWH): HY25 Diversification & Strategic Shifts Drive Growth Despite Rail Headwinds [SP: 849p, MC: £672M]
Mixed Financials but Strong Revenue Growth: Renew reported a 13% rise in Group revenue to £569.3m for the six months to 31 March 2025; however, adjusted operating profit dipped 1% to £32.0m due to Rail sector delays, impacting adjusted EPS (down 7.6% to 28.2p). An increased interim dividend of 6.7p (+5.4%) signals confidence.
Strategic Transformation to Pureplay Engineering: The Group exited Specialist Building and strengthened its engineering focus with key acquisitions: Full Circle (renewable energy services) and Excalon (electricity transmission & distribution), both integrating well and opening new growth avenues.
Rail Sector Navigating Challenges: Delays in Rail programme mobilisations under CP7 impacted profitability. However, Renew anticipates conditions will normalise and is seeing increased demand for reactive maintenance, supported by Network Rail's ongoing £45.4bn CP7 commitment.
Water Sector Delivers Strong Performance: The Water division is performing ahead of expectations, with Renew strongly positioned for the significantly expanded AMP8 cycle (£45bn addressable market), now working with 13 UK water companies.
Energy & Infrastructure Show Promise: The Energy division is set for growth, leveraging new acquisitions in renewables and T&D, alongside opportunities in Nuclear. Infrastructure, particularly Highways, benefits from expected increased investment (RIS3).
Confident Outlook with Record Order Book: Despite Rail headwinds, a record order book of £908m and a diversified business model underpin management's confidence in delivering against revised full-year expectations, anticipated to be ahead of the prior year.
Warehouse REIT PLC (WHR): Update on Blackstone Takeover Talks, PUSU Deadline Extended [SP: 98.60p, MC: £418.91M]
Blackstone's Offer Encounters Hurdle: Blackstone's indicative cash offer of 115p per share (adjusted for a 1.6p dividend) for Warehouse REIT is now uncertain.
Valuation Disagreement: Following due diligence, Blackstone has raised concerns, primarily citing a differing valuation of Warehouse REIT's Radway Green development asset, and has stated that it cannot currently proceed on the initial terms.
PUSU Deadline Extended: To allow for further discussion, the Takeover Panel has extended the Put Up or Shut Up (PUSU) deadline for Blackstone to either make a firm offer or withdraw its interest from May 12, 2025, to May 30, 2025.
Negotiations Ongoing: The board of Warehouse REIT is actively engaging with Blackstone and its advisors to address the valuation concerns and highlight the potential value of the assets.
Offer Terms and Uncertainty: The initial offer was stated as "final" unless a rival bidder emerges. Blackstone also retains the option to reduce its offer under certain conditions. Significant uncertainty remains as to whether a firm offer will materialise and, if so, at what price.
Conduit Holdings Ltd (CRE): Q1 2025 Growth, New CEO, Shareholder Returns & Catastrophe Impact [SP: 370p, MC: £612M]
Leadership Change and Shareholder Returns: Neil Eckert has been appointed Chief Executive Officer (CEO), and the Board has approved a new share buyback programme of up to $50 million, underscoring confidence in the company's intrinsic value.
Strong Premium Growth: Conduit achieved a 15.0% increase in gross premiums written, reaching $410.2 million, with growth recorded across all its Property, Casualty, and Specialty reinsurance segments.
Catastrophe Impact and Mitigation: The company is managing the impact of a challenging quarter for catastrophe losses. It maintains its previously stated net loss estimate of $100-$140 million for the California wildfires and has secured additional reinsurance to reduce future earnings volatility.
Solid Investment Performance and RoE Outlook: The investment portfolio returned 2.1% in the first quarter (Q1). While the 2025 Return on Equity (RoE) is forecast to be in the high single-digit to low double-digit range due to catastrophe events, Conduit remains confident in its mid-teens RoE target throughout the economic cycle.
Attractive Pricing Despite Moderation: Although overall risk-adjusted rates experienced a slight decrease of (4)%, pricing levels and terms remain attractive following several years of market improvements. Strong client relationships continue to support business acquisition.
H&T Group PLC (HAT): Agrees to £297 Million Takeover by US Pawnbroking Giant FirstCash [SP: 646p, MC: £280M]
Acquisition Offer: US-based FirstCash Holdings, Inc. has made a recommended final cash offer to acquire UK pawnbroker H&T Group PLC for 661 pence per share. This offer comprises 650p in cash and an 11p H&T dividend, valuing H&T at approximately £297 million.
Significant Premium: The offer represents a substantial premium of approximately 44% to H&T's recent closing price and a 71-78% premium to its three to six-month volume-weighted average prices (VWAPs). This valuation is higher than any level at which H&T shares have previously traded on AIM.
Board Recommendation and Rationale: H&T's Board has unanimously recommended the offer, viewing it as an attractive opportunity for shareholders to realise immediate cash value and de-risk their investment in light of future market uncertainties. This recommendation follows a negotiation process during which initial lower offers were rejected.
Acquirer Profile and Strategy: FirstCash is a major pawn operator in the US and Latin America. This acquisition marks its strategic entry into the UK market. The company aims to create the largest publicly traded pawn platform across the US, Latin America, and the UK by leveraging H&T's established presence.
Conditions and Timeline: The deal, structured as a scheme of arrangement, is subject to H&T shareholder approval, regulatory approvals from the Financial Conduct Authority (FCA) and the Competition and Markets Authority (CMA), and Court sanction. Completion is anticipated in the second half of 2025.
Kinovo PLC (KINO) – Recommended Cash Acquisition by Sureserve [SP: 85p, MC: £53M]
Sureserve's Recommended Offer: Sureserve Compliance Holdings Limited has made a recommended final cash offer to acquire Kinovo PLC at 87.5 pence per share, valuing Kinovo at approximately £56.4 million.
Significant Premium: The offer represents a 41.1% premium to Kinovo's closing price on 9 May 2025 (the last business day before the offer period commenced). Sureserve has stated that the terms are final unless a rival bid emerges.
Strong Shareholder Support: The Kinovo Board has unanimously recommended the offer. Furthermore, Sureserve has already received irrevocable undertakings and a letter of intent supporting the deal from shareholders representing approximately 47.05% of Kinovo's issued share capital.
Strategic Rationale: The acquisition aims to combine the complementary strengths of Sureserve and Kinovo, particularly Kinovo's expertise in electrical compliance services. This combination is intended to enhance their offering in the social housing and public sectors, with a strategic focus on decarbonisation and future growth.
Process and Timeline: The acquisition is planned to proceed via a Court-sanctioned scheme of arrangement, which will require shareholder and Court approvals. It is expected to become effective by early July 2025.
Assura PLC (AGR): PHP Tables Competing £1.68bn Share & Cash Offer, Challenging KKR Consortium [SP: 49.62p, MC: £1.61B]
Offer Details: Primary Health Properties (PHP) offers 0.3769 new PHP shares plus 12.5p cash for each Assura share. Assura shareholders also retain up to 1.68p in dividends, leading to an implied total value of 51.7p per share, valuing Assura at £1.68 billion.
Premium Offer: This represents a 4.7% premium to the KKR-Stonepeak consortium's 49.4p cash offer and a 38.2% premium to Assura's undisturbed share price before the offer period.
Strategic Rationale: The combination aims to create the UK's 9th largest listed REIT, a dominant specialist in primary healthcare property with a £6 billion combined portfolio, enhanced market presence, and improved access to capital.
Financial Benefits: PHP anticipates annual pre-tax cost synergies of ~£9 million, driving earnings accretion and dividend growth. The combined entity is expected to benefit from embedded rental growth and the value of existing low-cost debt.
Shareholder Impact & Structure: Post-completion, Assura shareholders would own ~48% of the combined group. The deal is a reverse takeover for PHP, thus requiring PHP shareholder approval, and is not conditional on antitrust approvals.
Key Conditions & Timeline: The offer is conditional on, among other things, 75% Assura shareholder acceptance (can be lowered to >50%). Completion is anticipated in Q3 2025, with offer documents expected by mid-June 2025.