The hedge fund pushing for change at passport and banknote maker De La Rue has increased its stake and ramped up pressure on the boss to overhaul the firm.
Crystal Amber is now understood to control about 4 per cent of the British company, up from 3.1 per cent following a high volume of trades on Friday.
The activist fund is calling on De La Rue’s management to come up with a strategy that will prepare it for the future by focusing more on selling its technology.
Under pressure: Crystal Amber is now understood to control about 4 per cent of the British company
Its move comes as the firm has been laid low after losing the contract to make Britain’s blue passports after Brexit to a French rival earlier this year. Since then shares are down almost 12 per cent and bosses have been warned the company is a sitting duck for takeover bids.
Some investors have claimed Martin Sutherland, the chief executive, is ‘on probation’ and must urgently set out how he plans to turn around the company’s fortunes. He is seen to have been weakened by what investors saw as the disastrous handling of the passport fiasco.
Richard Bernstein, a manager at Crystal Amber, said De La Rue’s traditional sources of income were under threat because of the digital revolution. But he said it could still succeed as an independent company if it instead focused on growing markets it already has a foothold in, such as selling cutting-edge technology it has developed for banknote security and product authentication methods.
He warned that a failure to adapt would leave it open to hostile takeover by foreign predators, with US dollar maker Crane Currency and France’s Oberthur thought to be possible candidates.
Bernstein said: ‘In our view, De La Rue is a technology business and that is where its future growth lies, but the lack of earnings per share growth in recent years has been problematic. The company needs to give shareholders better visibility of its growth strategy and it needs to develop scalable technology that will keep customers coming back.
Warning: Richard Bernstein, a manager at Crystal Amber
‘Our preference is for De La Rue to remain independent, and if it came to its investors seeking money for acquisitions at the right price we would support that. We always seek to work with management but, of course, if the market does not see growth then our brief as an activist is to effect change.’
Crystal Amber is De La Rue’s eighth-biggest shareholder.
The fund previously clashed with online grocer Ocado over its strategy, saying the company was wrongly presenting itself as a food retailer when its most valuable assets were its software and robot warehouses. Ocado later struck a series of lucrative deals with foreign retailers to license its tech.
As speculation mounts that De La Rue could become a takeover target, it is understood to have spoken to corporate finance bankers at Investec and has prepared a defence plan.
Bernstein’s comments come ahead of De La Rue’s AGM on Thursday. Last night a spokesman said: ‘De La Rue is focused on executing its strategy which will deliver long-term shareholder value, and the board and management continue to maintain regular dialogue with shareholders.’
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