The Bobst family shareholders believe they have made an attractive purchase offer to the remaining shareholders. But by no means everyone got into it. They speculate on a later – higher – offer.
The machines from the French-speaking Swiss company Bobst are used for the production of packaging.
As a rule, companies go public because they have been taken over by a competitor or by financial investors. This is not the case with the world’s largest manufacturer of machines for the production of packaging, the company Bobst from Mex in the canton of Vaud. The company, which employs almost 6,000 people, decided to go private because the founding family wanted “fewer restrictions”. This was said by the top family representative in the company, CEO Jean-Pascal Bobst, at an investor conference in Zurich.
The transparency should not be shaken
When asked about the advantages and disadvantages of a listing, Bobst only listed the positive factors. Listed companies would benefit from full access when raising funds. At the same time, the presence on the stock exchange forces companies to have a high degree of transparency. “We also work to the highest standards in financial matters,” said Bobst.
The management hastened to emphasize that nothing will change in the future. The mechanical engineering group wants to continue to publish business figures twice a year. With a view to the two bonds that the company has issued with a total value of CHF 335 million and that are due for repayment in 2024 and 2026, a one-off publication would be sufficient to meet the legal requirements.
Bobst also plans to continue holding investor orientations. The company will not completely part with its public shareholders anyway. Although the family shareholders via their investment vehicle JBF Finance all other shareholders a purchase offer at a price of CHF 78 per share had submitted, they were offered less than two-thirds of the capital not already in their possession. After the grace period expired, JBF Finance reported an 85.3 percent stake at the end of October. Before the offer was published, the vehicle controlled around 53 percent of the capital.
Not only small shareholders remain on board
The total number of registered shareholders has fallen from around 4,500 to just over 1,000. They would all come from the canton of Vaud and hold between 1 and 250 shares, the patron explained innocently. People are so attached to the company that they don’t want to break the ties.
Representatives of institutional investors, however, made it clear on the fringes of the investor conference that by no means only small shareholders would support Bobst. There is no other way to explain why the company attracted so many listeners again despite the planned delisting. Several dozen people accepted the invitation to the investor conference in Zurich.
“Offer is too low”
The purchase offer from the family shareholders has caused resentment among some shareholders. “It’s too deep,” said an institutional investor to the NZZ, probably representative of many. He is among those who have purchased additional titles since the offer was made public in July 2022 and are speculating that the family will make a higher offer at a later date. On Wednesday, the course closed at 65 francs. It has thus fallen by almost a quarter since the beginning of the year.
Jean-Pascal Bobst, representative of the founding family and CEO.
For the time being, patience should be the order of the day on the part of the public shareholders. The family shareholders described their offer as “attractive” last summer. They pointed out that the price was 22 percent above the average rate that had been reached in the four weeks before the offer was published. According to Jean-Pascal Bobst, the family plans not to purchase any more shares for the time being. Visibility in the financial markets has deteriorated and now it is a matter of preserving cash holdings.
According to the company, the board of directors, to which Bobst himself is not a member and which will continue to consist of both independent members and family representatives, will make a decision on the delisting by the end of November 2022. The delisting can be completed within a period of at least five days and at most a few months. The remaining shareholders would be given the opportunity to trade their shares over the counter, the company boss assured. There will be no so-called squeeze-out (compulsory settlement of the minority shareholders, editor’s note) because the family shareholders are not aiming for a 100 percent stake.
What is the future dividend policy?
It is still unclear what the company’s future dividend policy will look like. Based on the CHF 2.50 that analysts at the Zürcher Kantonalbank are expecting as a profit distribution for the current year, this currently results in a return of almost 4 percent, which investors should perceive as attractive even in an environment of higher interest rates. But in the past, Bobst shareholders have had to put up with years without a dividend.
The mechanical engineering company’s business is currently going well. The company confirmed its forecast from last summer of generating sales of CHF 1.7 to 1.8 billion in the current year. That would correspond to an increase of 9 to 15 percent compared to the previous year. At the same time, the company expects to start 2023 with a record high order backlog, the volume of which should be roughly equivalent to annual sales.
Bottlenecks in the supply chains weigh on margins
The group benefits from the fact that its machines are mainly used to produce packaging that goes to the food and pharmaceutical industries. Confidence continues to dominate in these sectors.
In view of inefficiencies in its own production, which are mainly due to continued delays in the delivery of components, it has also become more difficult for Bobst to achieve the profitability targeted for 2022. The goal of a return on sales of 7 to 8 percent at the level of operating profit (EBIT) has become “very ambitious”, the management points out.