De La Rue shares off 15% as Oberthur drops takeover bid

Shares in UK banknote printer De La Rue have fallen 15% after suitor Oberthur decided to throw in the towel.

The French company cited the "continued refusal of the board of De La Rue to engage in meaningful discussions".

It follows the board's rejection of Oberthur's improved 935p-per-share offer earlier in the day.

Shares in the firm, which was plunged into crisis by production problems last year, ended the day down 125.5p at 694p, 26% below Oberthur's offer price.

The company said in a statement on its website, external that it had received commitments from banks and private equity funds to provide the necessary financing for the takeover.

For its part, De La Rue, external said its board had "considered this revised proposal carefully and believes that it continues to undervalue significantly the strong fundamentals of the Company and its long term prospects".

"Shareholders in De La Rue may now ask themselves how long it will be before the market price of De La Rue shares attains the level of the increased proposal," said Oberthur.

Shares in the UK company hit a low of 549.5p in November, before news of the takeover offer began to emerge.

The privately-owned French firm said it first approached the board of its British rival four months ago.

The move came after De La Rue was thrown into turmoil by a production fault at its Overton factory in July, prompting its chief executive to resign and its share price to fall by a third.

In its latest statement, Oberthur called on its UK counterpart to clarify to investors its "customer relationships and financial prospects".

The problems are thought to have caused De La Rue to lose the Reserve Bank of India as a client.

They came to light shortly after the company signed a five-year extension to its exclusive contract to print banknotes for the Bank of England.

The company admitted that 2010-11 paper production and sales would be "materially lower" as a result of the production errors.

In November, the firm revealed that pre-tax profits before exceptional items had more than halved in the previous six months, while revenues fell 17%.

In December, De La Rue's board finally ended several months without a chief executive with the appointment of Tim Cobbold, previously the head of business power company Chloride Group.

In rejecting Oberthur's improved offer, the company's board expressed its confidence in Mr Cobbold "to lead a restructured and strengthened management team".

De La Rue, founded in 1813, prints notes for 150 countries.

Oberthur Technologies was formed in 1984 by its majority-owner and chief executive, Jean-Pierre Savare, when he took over the secure printing activity of the Oberthur printing works, which was originally founded in 1842.