Northern Ireland can lay claim to few corporate headquarters, and listed companies are a rare and endangered species here.
So when a hostile takeover bid emerges for one of the North’s homegrown successes, it should send alarm bells ringing. Particularly when that company is Andor Technology, grown from scratch in a physics lab in Queen’s University Belfast in 1989 and today a global business with annual revenue in the region of £58 million (€69 million).
Andor, which develops and manufactures high-performance digital cameras, empl oys 350 people in 16 offices wo rldwide and has some 10,000 customers in 55 countries.
But at the heart of Andor’s global ambitions has always been its corporate headquarters in west Belfast. It has been the springboard for a remarkable journey from start-up to listed business that last year declared pretax profits of £10 million for the first time.
But could Andor’s Northern Ireland credentials now be under threat? Last week London-listed Oxford Instruments tabled a £160 million hostile bid for Andor Technology, which the Belfast company said it was willing to consider.
'Strategic rationale'
It emerged that Oxford Instruments had been in discussions with Andor since July 9th, when the chairman of Oxford Instruments had sent a letter to Andor's chairman outlining the "strategic rationale for the transaction and an indicative proposal of 420p per share in cash, subject to due diligence".
In September it increased its offer to 470p per Andor share and in October further increased its indicative proposal to 500p per Andor share.
Oxford Instruments chose to disclose all of this information last week when it announced its latest interim results, which showed total revenue in the first half of £166.3 million.
The Belfast company said it was “disappointed” by Oxford Instruments’ decision to go public about the proposed acquisition. Andor’s board said it was “premature and unhelpful in light of ongoing discussions”, and added that it remained “committed to our long-term strategy of delivering growth through continued investment in innovation”.
But Andor said that, while it was committed to its internal plans, it was willing to consider “any proposal which maximises value for its shareholders, while minimising conditionality and execution risk”. In the meantime, it is business as usual for the company. Or is it?
It has emerged that just over six weeks ago Andor decided to change its profit-related pay scheme for employees.
In last year’s annual report, Andor said the “profit-related pay available for distribution is 15 per cent” of operating profit.
What will it be this year? Andor’s full-year results are due to be published on December 2nd. A spokesperson for Andor confirmed the profit-related pay bonus had been “changed” but declined to say whether it had been removed.
Why would the Andor board decide to do this now? Might the company be more attractive to potential suitors if it was not in the position of paying, as it has in the past, a £1 million bonus pool to its workforce?
Other recent developments at the company have raised eyebrows in investment circles, not least its decision to splash cash around on acquisitions.
Industry analysts say it would be no surprise if more suitors for Andor come to the table in light of the bid, which some believe undervalues its future earning potential.
Andor has a high profile in the US and could prove an attractive trade acquisition for industry leaders such as Fortune 200 science and technology group Danaher.
Oxford Instruments has until December 10th to announce a firm intention to make an offer or walk away.
Watch this space.
