The contractor’s shares dropped 11% from 161.75p to 144.5p last Friday after news that the company’s auditor, PricewaterhouseCoopers, had resigned only 28 days before the financial year-end.
About 10% of the company’s share capital has changed hands in the past week, further fuelling speculation that a potential bidder is building up a stake. One analyst said: “Somebody could well be building up a stake. It’s an awful lot of shares that have changed hands.” On Tuesday, 7.7 million shares were traded, following Friday’s figure of 4.3 million.
One broker said: “We have had no shortage of interest in the stock from a variety of people. Somebody out there will have seen a bargain.” Another commented: “There is a lot of interest out there both from investors and from elsewhere.”
Jarvis now has a capitalisation of £198.1m – a fraction of its value last year, when its share price hit a high of 517.5p. The fall followed a profits warning early last year, which prompted fears that the main driver of Jarvis’ success, its high-margin rail maintenance business, was about to suffer a setback.
Somebody could well be building a stake. A lot of shares have traded hands
City Analyst
Some analysts think that the company’s private finance initiative work will eventually win round investors, however this may not be in time to prevent a takeover. One analyst said: “All the signals are that, operationally, the company is comfortable and, on that basis, it is extremely cheap.”
Analysts agreed that many shareholders would now be attracted by a cash bid for the company. “A lot of them would take cash at the drop of a hat,” said one.
Companies linked speculatively with Jarvis include Skanska, Serco and WS Atkins.
