One of the world’s largest private equity investors, Bain Capital, has made an approach to acquire Chemring, the FTSE 250-listed defence and aerospace firm, according to a report by Sky News.
The move is part of a growing trend of foreign buyout interest in undervalued UK companies.
Share price of Chemring Group was up by more than 14% on Monday.
According to sources familiar with the matter, Bain has lodged at least one proposal in recent weeks, with an initial offer reportedly tabled at 390p per share, the report said.
This represents a modest premium to Chemring’s stock price of 356p as of Monday morning.
A second offer was said to be under consideration, though it remains unclear whether it has been formally submitted to the company’s board, chaired by former Rolls-Royce Holdings and Meggitt executive Tony Wood.
Chemring a strategically sensitive deal but Bain’s move remains uncertain
Despite Bain Capital’s interest, there is no certainty that it will aggressively pursue the deal.
One source suggested the private equity firm had not yet decided how far it was willing to push negotiations.
Chemring, which produces high-tech defence equipment and services organisations like NASA and SpaceX, remains a strategically sensitive acquisition target.
Its product line includes infrared countermeasures designed to deflect enemy attacks.
The company employs around 2,700 people, with operations spanning critical areas of the defence and aerospace sectors.
In its most recent financial update, published in mid-December, Chemring revealed a record order book.
However, its shares tumbled following concerns over profit margins linked to issues at a US facility.
Defence spending surge fuels interest
The surge in global defence spending has made companies like Chemring attractive targets for private investors.
NATO members have pledged to increase military expenditures, particularly in response to geopolitical tensions and Donald Trump’s re-election as US president.
Michael Ord, Chemring’s chief executive, has expressed confidence in the company’s future, calling its outlook “increasingly robust.”
He also noted a shift from globalisation to an era of “great power competition,” a sentiment echoed by defence sector analysts.
Despite its record order book, Chemring’s stock remains largely flat compared to a year ago.
With a market capitalisation of approximately £975 million, a typical takeover premium of 30% would value the company at around £1.3 billion.
A growing trend of UK takeovers by private equity groups
Chemring is the latest in a series of London-listed firms targeted by private equity groups.
Learning Technologies Group recently agreed to be taken private by General Atlantic, while BP and ITV remain the subject of takeover speculation.
Meanwhile, Amsterdam-listed Just Eat Takeaway, which recently delisted from London, received a €4.1 billion buyout offer from tech investor Prosus.
Bain Capital, whose portfolio includes esure and a stake in Virgin Voyages, has remained tight-lipped about its approach. Chemring has also declined to comment on the matter.
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