De La Rue confirms takeover talks ongoing

Could De La Rue’s 200-year position as a UK commercial institution be coming to an end? Maybe so, as the company confirms it is in talks that could lead to the sale of its core currency and authentication divisions.

In a trading update sent out this morning, the company said it is in discussions with “a number of parties” who have expressed an interest in its two divisions, although it added there is no guarantee that any offers will be made.

They are sufficiently advanced, however, to prompt De La Rue to postpone the publication of its full-year financial results ended March 30 until July.

The revelation comes amid disquiet in the UK about the sale of well-established organisations to overseas companies, brought to the fore this week by a £5bn ($6.4bn) takeover offer for Royal Mail by Czech billionaire Daniel Kretinsky.

Chief executive Clive Vacher said both the currency division – which produces banknotes – and the authentication unit which provides tax stamps, security labels and other technologies have seen “positive momentum” thanks to contract wins and renewals in the last year. For now, there is no change to the company’s forecasts for fiscal 2024.

Among recent developments are the renewal of two government tax stamp programmes, for three and five years, respectively, with total contract values of more than £150m, taking the total value of current contracts on the authentication division’s books to £350m.

That suggests it is well on track to meet the target of £100 million or more in revenues in the year and points to “the long-term nature and strength of this division,” said De La Rue. In April, it also saw a contract to provide security labels to Microsoft renewed for another five years.

Currency meanwhile saw its order book increase to £239m at the end of March – up around £100m in a year – in what has been described as a recovering market for banknotes which suffered in recent years due to cash stockpiling by central banks during the pandemic.

Clive Whiley, chairman at De La Rue, said: 2Since my appointment a year ago, the board has considered a broad range of possible strategic alternatives including transactions with multiple parties which may involve a combination with, or the sale of, the group’s divisions.”

He added: “The board confirms that the discussions with the relevant parties are advancing, and we expect to update further at the time of the full-year results in July.”

The update comes after an effort of several years to restore the fortunes of De La Rue under Vacher, who joined the company in 2019 shortly after it lost the contract to produce the UK passport to rival Gemalto.

It is no longer in that business but designs around a third of the world's banknotes, including the UK’s new King Charles polymer range.