Fresh private equity interest in IMI

Shares in IMI have continued to climb this week amid speculation that private equity is considering a takeover approach for the UK engineering group.

At close yesterday, shares were up 3.8% to 380.75p. By 12pm GMT today, IMI’s shares were up a further 1.12% to 385p. IMI has a market capitalisation of approximately £1.22bn (€1.64bn).

Despite the climb, the share price is still significantly down on its June 2007 high of 637p. As a result, private equity would likely be able to finance a bid, especially if financial buyers partner to form a bidding consortium.

The UK engineering sector has been attracting private equity interest of late, with diversified engineering group FKI subject to fresh speculation that US buyout firm The Blackstone Group is considering an approach. Blackstone is understood to have been the mystery bidder behind last year’s 130p per share initial approach.

At that time, FKI had a market cap of approximately £750m, but a recent profit warning has seen its value shrink to £325m. FKI closed yesterday at 70.5p, just above the 70p Melrose put forward as a possible offer at the beginning of February. By 12pm GMT today, however, FKI had climbed a further 3.9% to 73.25p.