Bodycote, a Macclesfield-based provider of heat treatment and metallurgical technologies, agreed to a £1.65bn takeover by US private equity firm Veritas at 940p per share, valuing the company at £1.85bn including debt. The shares closed at 955p on Tuesday, suggesting the market sees a rival bidder, CVC Capital Partners, as a potential contender.
The offer represents a 25% premium to Bodycote’s pre-bid level, though analysts at RBC noted the valuation was not particularly generous. The implied earnings multiple aligns with Bodycote’s 10-year average, despite the company’s recent performance. Bodycote’s directors highlighted progress under its 2024 strategy, which targets operating margins of over 20% and a return on capital employed of 15-20% through the cycle. The group has also returned £120m to shareholders via buybacks while maintaining a 38-year streak of dividend growth.
The company acknowledged structural challenges in automotive and industrial markets, alongside macroeconomic uncertainties, as risks to its medium-term targets. The board expressed confidence in executing its strategy but did not provide updated guidance. The potential for a higher bid from CVC remains a key variable, though no formal offer has been made.
Bodycote’s departure follows a string of London-listed firms exiting the public market this year, including Gamma Communications and Capricorn Energy. The trend underscores concerns about the UK’s shrinking industrial base and the lack of political response to the growing trend of private equity acquisitions. A recent Peel Hunt report identified over 150 bids for UK companies valued at more than £100m since early 2023, yet Westminster has shown little urgency in addressing the issue.
The deal marks another loss for the London market, with Bodycote operating 130 sites across 22 countries and employing 4,000 people. While private equity ownership may support its long-term growth, the transaction highlights the challenges faced by mid-cap UK industrials in retaining independence.
