Lone Star makes final attempt to buy engine parts manufacturer Senior

Lone Star has sweetened its offer for engine parts manufacturer Senior, as the pandemic plundering of Britain continues.

The US private equity firm tabled a ‘fifth and final proposal’ to buy Senior, this time for 200p per share – up from 185p earlier this month. 

Lone Star’s bid values Senior at £838.8million, a generous rise from the £738million previously offered.

Final offer: US private equity firm Lone Star revealed it had tabled a ‘fifth and final proposal’ to buy British engine parts manufacturer Senior

Senior’s shares climbed 9.2 per cent, or 14p, to 165.7p in response yesterday, and are now up 40 per cent compared to where they were the day before Lone Star announced its approach last month. 

But they are still a way off the 200p offer price, suggesting investors think the deal will flop.

Senior’s directors have so far turned down every Lone Star bid, saying they ‘fundamentally undervalued Senior and its future prospects’, and are expected to do the same with this latest approach.

Analysts at Stifel said the offer ‘doesn’t dazzle enough’, and added that investors would be better off waiting for a ‘significantly improved’ bid from a rival suitor or allowing Senior to carry on with its own improvement plan.

Even after their recent rise, Senior’s shares are still down 27 per cent from two years ago, as the pandemic has axed demand for the aeroplane engine parts that the manufacturer specialises in.

While Lone Star said that it would not be making another bid for Senior, it did reserve the right to increase its offer if a rival bidder swooped in. 

The US suitor now has until June 25 to make a firm offer or withdraw its interest.

It comes as a wave of buyouts has swept the UK, with cash-rich private equity firms hunting for bargains amid Britain’s pandemic-ravaged businesses.

According to data firm Dealogic, private equity bidders have acquired more firms over the past 18 months than at any time since the financial crisis.

Since the pandemic began, deals worth more than £52billion have been waved through. 

Developer McCarthy & Stone has been grabbed by Lone Star, and the fund administration business Sanne is attempting to bat off Cinven.

TDR Capital and I Squared Capital won enough shareholder support to go ahead with their £2.3billion takeover of Aggreko, a company which rents power, heating and cooling equipment to construction sites and music festivals.

And Allied Universal, the North American security business backed by private equity firm Warburg Pincus, clinched the £3.8billion takeover of G4S after a protracted battle.

Every time a company is bought off the stock market by private equity, it means savers can no longer invest in it and benefit from its growth.

Michael Hewson, analyst at trading platform CMC Markets, said: ‘Overseas investors appear to see more value in UK assets than UK investors, rather begging the question why we continue to sell ourselves short as a nation in finding value in UK listed businesses – leaving them vulnerable to the predatory gaze of private equity.’