- De La Rue is being targeted by hedge fund Crystal Amber after losing Brexit deal
- It currently makes 8m burgundy passports a year but risks losing mass profits
- £100m has been wiped off its share price after contract was given to Gemalto
Matt Oliver And Hannah Uttley For The Daily Mail
The UK firm that lost the contract to make Britain’s new blue passports is being targeted by City vultures who could now push for a sale, it emerged last night.
It is understood that De La Rue is in the crosshairs of hedge fund Crystal Amber after the Government awarded the post-Brexit passport deal to a Franco-Dutch firm instead.
Days before it emerged De La Rue had lost its crucial contract – it currently makes 8million burgundy UK passports a year – the company issued a warning about profits, sending its share price plunging.
The turmoil has wiped more than £100million off its value, leaving the firm vulnerable to takeover bids.
It is understood that De La Rue is in the crosshairs of hedge fund Crystal Amber after the Government awarded the post-Brexit passport deal to a Franco-Dutch firm instead
It has also led Crystal Amber to amass a stake of about 2 per cent in the 200-year-old company so far, according to Sky News.
It follows the bid by asset-stripper Melrose to buy defence giant GKN – raising concerns about both the firm’s long-term future and Britain’s national security.
Crystal Amber is run by activist investor Richard Bernstein and has successfully pushed for the sales of chocolate retailer Thorntons and the Pinewood film studios to overseas buyers.
Pinewood was snapped up for £323million by a French property company, while Thorntons was sold to Italian rival Ferrero for £112million.
The hedge fund is said to believe the drop in De La Rue’s value has turned it into an ideal takeover opportunity for foreign buyers.
Mr Bernstein, 55, has said the pound’s slump after the Brexit vote has made UK companies cheaper to buy.
‘If you’ve got a pot of money and you come from overseas this is a great place to invest,’ he told The Daily Telegraph.
David Buik, an analyst at Core Spreads, warned the passport fiasco had left De La Rue in danger of falling to a predator. He said: ‘There is no smoke without fire.
‘The share price is down 20 per cent this year, the management seems to have lost its way a bit and the loss of the passport contract has left De La Rue even more vulnerable to a possible takeover.’
It comes as the firm, which has 200 jobs at risk at its Gateshead factory, is expected to file a legal challenge against the decision to award Gemalto the post-Brexit passport contract.
Ministers say the Gemalto deal will save up to £120million over almost 12 years.
The turmoil has wiped more than £100million off De La Rue’s value, leaving the firm vulnerable to takeover bids. Pictured: Passport gates at the UK border with France
But De La Rue claims that its proposal was more secure and Gemalto may have deliberately offered below cost price.
It has brought in leading City law firm Slaughter and May as it prepares for a High Court battle, it is understood.
Russ Mould, a City analyst at AJ Bell, also said the loss of the passport contract could have led to the hedge fund’s interest in the firm.
He said: ‘The reasons Crystal Amber might be looking at De La Rue is because there’s been some recent trading disappointment, the chief financial officer left last week and you’ve had the loss of this passport contract.
‘In a classic scenario, what an investor will tend to go for is management change, strategic action which would be breaking a company up or spinning a business off or even putting it in place for a bid.’
He questioned whether Crystal Amber would be able to push for a sale because of possible national security concerns, but added: ‘They will clearly think there’s some value here to be unlocked in some way, shape or form.’
More than 329,000 people have signed the Daily Mail’s petition to reverse the decision to give Gemalto the £490million contract.
Last night De La Rue declined to comment. Crystal Amber was unavailable.