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Sunbeam’s parent company GUD Holdings is currently negotiating to acquire a company, documents submitted to Australian Securities Exchange this morning reveal.
The revelation was made after the ASX’s compliance division sent GUD Holdings a Price Query letter — colloquially known as a ‘speeding ticket’ — over the weekend following a surge in GUD’s share price on Friday 27 March 2015. GUD had been trading at the $7.70 mark for most of March 2015, before a surprise rally on Friday saw it bulldoze its way up almost 8 per cent to a close of $8.57.
It is common practice for the ASX to make enquries with companies that experience such rapid price fluctuations, for fear of insider trading. In response to the ASX’s questions as to whether GUD is aware of any information that might affect its trading price, company secretary Malcolm G Tyler offered the following response:
“The company regularly investigates strategic transaction opportunities and is currently in early stage negotiations in respect to a potential acquisition. There is no certainty that any transaction will eventuate.”
In addition to the famous Sunbeam brand and the freshly minted partnership with US appliance brand Jarden, which is contributing 19 per cent of revenue and 8 per cent of earning before interest and tax, GUD Holding also markets the Dexion (32 per cent and 6 per cent), Davey (18 per cent and 16 per cent), Ryco (17 per cent and 51 per cent), Lock Focus (2 per cent and 1 per cent) and Oates (12 per cent and 18 per cent) brands to businesses and consumers. It is unknown what category the potential acquisition sits in, or if it is even broadly complementary with an existing part of GUD’s business.
Back in 2010, GUD Holdings purchased 19.3 per cent of publicly listed appliance rival Breville Group. Two years after that purchase, GUD attempted to buy out Breville, which would create a super small appliance stable. The ACCC, however, kyboshed the plan and, as a result, GUD sold its shares in Breville for a tidy profit.
Could GUD be looking to make another play for Breville, which is currently operating without a CEO, following the departure of Jack Lord (late of both brands) in 2014? UPDATE: Although there hasn’t been an official announcement, the ASX is now listing Mervyn Cohen as both the CFO and the CEO of the Breville Group.