LONDON One in seven companies in the U.K. electronics manufacturing sector could change ownership as a result of the current economic climate, claims a study by financial analysts Plimsoll.
The researchers say there are a surprising number of 'cash rich' competitors waiting in the wings which could see the market set for a prolonged period of consolidation.
“I am sure any director worth his salt would agree that, in the current climate, there are simply too many companies chasing too little market,” said David Pattison, author of the new Plimsoll Industry Analysis – Electronics Manufacturers. “With many directors eyeing the exit doors and highly leveraged buyouts consigned to history for the time being, it really is a buyers market out there for cash rich companies.”
“In the Plimsoll Industry Analysis we have identified 217 companies that have a sizeable cash reserve sat on their balance sheets that, due to record low interest rates, is generating nothing. One company has a £82 million (about $135 million) cash pot; a whopping 80 perecnt of turnover. These companies are now in the position to buy up large chunks of market share at rock bottom prices and make that money work for them. They must be like kids in a sweet shop at the moment – all those distressed competitors available at a fraction of their true value,” added Pattison.
“The UK Electronics Manufacturers market is still widely regarded as one of the UK’s most fragmented sectors. In our report we analyzed 700 companies with a turnover of over £1 million (about $1.65 million) per annum and have picked out 125 that are primed to be taken over. Buying one of these businesses represents a massive opportunity for someone to enhance their share of the market. Either way, the market is set for a wave of takeovers in the next months.”