Deal agreed
The business news that matters
Hello and welcome to the latest edition of Off to Lunch…
In 1936, 88 years ago, Jack Bowthorpe raised £2,000 from relatives to form a new business that would develop products for the fast-growing electronics market. That business was initially called Goodliffe Electric Supplies and grew quickly. It changed its name to Bowthorpe Group and moved from Croydon, south London, to Crawley, West Sussex in 1948 because it needed more space. Bowthorpe would go on to manufacture and sell a whole range of electrical components for different industries.
Jack Bowthorpe died in 1978. The first person he hired - Ray Parsons - became the chairman. The company is still based in Crawley today but it looks very different to the one that Jack Bowthorpe founded. In the late 1990s Bowthorpe pivoted its strategy towards another fast-growing industry - telecommunications - and changed its name again to Spirent Communications. It now specialises in testing 5G, Wifi and cloud-computing networks, as well as autonomous vehicles.
I am recalling the history of Spirent because an announcement today means the company could be about to face its biggest change yet. Spirent’s board has accepted a £1 billion takeover bid from Viavi Solutions, a US telecoms group. The deal is the latest example of a British company being targeted by an overseas buyer.
Eric Updyke, the chief executive of Spirent, said:
"Spirent has undergone a period of significant transformation and growth over recent years and I am proud of the significant progress we have made, thanks to the efforts and commitment of our people. We have evolved our offering and routes to market to focus more on high-quality, high-growth, software-centric solutions and have become a mission-critical partner to our customers in a more complex and digitised world.
“More recently, however, we have endured significant challenges due to the macro backdrop and the impact of this on our core end markets. These conditions are likely to continue for some time…
“The combination of the Viavi Group and the Spirent Group creates a stronger business that will be better able to compete in what remains a challenging market environment and we are confident in the opportunities this will bring for many of our stakeholders."
The challenges referred to above include a profit warning from Spirent last year, when the company said demand from customers had weakened due to the difficult economic environment.
The offer from Viavi is valued at 175p per share. This includes 172.5p in cash and a 2.5p special dividend to Spirent shareholders. The private equity firm Silver Lake is investing $400 million (£315 million) into Viavi as part of the deal.
The offer values Spirent shares at 61.4 per cent more than their closing price on Monday evening. However, as you can see from the graph below, the share price was a lot higher until a difficult 2023…
The board of Spirent has recommended that shareholders vote in favour of the deal at a meeting that should take place in a few weeks. However, more than 75 per cent of votes will need to be in favour of the deal for it to be approved.
You can find the announcement from Spirent here and more on the history of the company here
Podcast…
The new episode of our Business Leader podcast is out today and looks at the story of how Ophelia Brown built Blossom Capital, a venture capital firm which has raised around $1 billion (£789 million) from investors since she launched it in the UK in 2018. Blossom is a rare success story - it is a female-led start-up and venture capital firm but is also thriving away from the traditional heart of this industry in Silicon Valley. Blossom uses the money it has raised to invest in promising businesses in Europe. We speak to Ophelia Brown about how she founded the business, raised the money, and what she has learned along the way.
You can listen to the episode on Substack here, Apple here and Spotify here
Other stories that matter…
1. The latest on the Budget: the chancellor has decided to cut national insurance by 2p and will leave income tax unchanged, according to a story by The Times here. The government will also announce that it is extending a recovery loan scheme until 2026 to support small businesses (Sky News story here). And it will reverse proposals to increase the threshold needed to qualify as a high-net-worth angel investor from £100,000 of annual income to £170,000. This proposal had sparked a backlash because it would have removed benefits for many angel investors (UKTN story on that here)
2. Retail sales rose by a disappointing 1.1 per cent year-on-year in February, according to the latest report by the British Retail Consortium and KPMG. This sales figure represents sales by value and is well below the rate of inflation - which was 4 per cent in January - suggesting the volume of products sold has fallen. This is the lowest rate of sales growth since summer 2022. You can find the BRC report here. In other economic news, new car sales rose 14 per cent year-on-year to 84,886 in February, which was the best performance for this month since 2004. The increase was driven by businesses and other fleets investing in vehicles. In contrast, sales to consumers fell 2.6 per cent. You can see the latest figures from the Society of Motor Manufacturers and Traders here
3. Monzo, the digital bank, has raised £340 million of new funds at a valuation of £4 billion. Alphabet, the owner of Google, and HongShan Capital, which was previously the Chinese arm of Sequoia Capital, were involved in the fundraising. TS Anil, chief executive of Monzo, said: “We’ve built incredible momentum in the business over the past few years which has led to us reaching more than 9 million customers, turning profitable and launching even more ground-breaking products.” You can read more here
4. Some interesting new academic research suggests that housing affordability in the UK isn’t as bad as people claim and that it has improved since the financial crisis thanks to lower interest rates on mortgages. However, there is an issue in London and this could be improved by the government intervening to boost supply and upping benefits for potential buyers. More from Klement on Investing here
5. Humility is a vital skill for business leaders but it can also cause problems if it leads to indecisiveness, means you don’t get the praise you deserve, and limits the development of your team. That is from a new report by Harvard Business Review which you can read here
The new Business Leader…
The new Business Leader website and magazine have now launched. We are building a new inspirational, aspirational and agenda-setting business publication for the UK. You can read our analysis, interviews and expert columnists on our website by clicking the image below. Our new magazine is on its way to shops and you can subscribe to your own print or digital version by clicking here
And finally…
Dune: Part Two has attracted rave reviews from film critics and is proving popular with UK audiences too. The film enjoyed the biggest opening weekend at cinemas since the release of Barbie and Oppenheimer - aka Barbenheimer - last summer. The film brought in £9.3 million over the weekend after being released on March 1, according to official figures. You can find that data here.
The film is attracting strong reviews from those who have seen it. It currently has a score of 9.0. out of 10 on IMDb, the film review site, from more than 100,000 reviews. To put that score in context, Dune: Part Two now ranks as the tenth-best film of all time on IMDb’s rankings. It sits between The Lord of the Rings: The Fellowship of the Ring and The Good, the Bad and the Ugly. You can find those rankings here
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