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Sepura rises again after broker predicts takeover

Published: 09:13 19 Sep 2016 BST

Site worker using digital radio walkie-talkie
Liberum reckons Sepura is attractive due to its presence in terrestrial trunked radio

Shares in troubled walkie-talkie maker Sepura Plc (LON:SEPU) were on the up again on Monday after a broker reiterated its belief that the company was a takeover target.

The stock lifted 0.3p, or 1.9%, to 15.8p after Liberum Capital said the company’s warning last week of a potential bank covenant breach had put it in play.

The broker reckons Sepura is attractive due to its presence in terrestrial trunked radio (TETRA) - a professional mobile radio and two-way transceiver specification – globally and in North America in particular.

Sepura said in late July that it had received a preliminary takeover approach from an unidentified third party, although the potential bidder later said it did not plan to make an offer.

Liberum’s Ben Bourne said in a note on Monday: “Following a preliminary approach announced in July, Sepura’s current situation will draw other potential acquirers.

“A large installed base of TETRA radios and a foothold in the nascent US market are attractions.”

Sepura, which makes walkie-talkies for industrial uses, blamed the problems on a fall in orders in the last few months as customers held off from replacing or upgrading equipment due to budget pressures.

Major contract awards in the group’s systems business had also faced delays, meaning it would fail to hit its adjusted earnings target.

Bourne said Liberum was changing its revenue and profit estimates on the stock and reviewing its recommendation and target price.

“We need greater certainty on trading, management and funding to reinstate a target price,” he said.

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