Shares digital

More bids for engineering companies are expected in the wake of Melrose’s (MRO) proposed £325 million cash offer for ailing FKI (FKI) – the turbo generators and wire rope group. FKI shares shot up by almost half to 67p just 3p shy of the indicated 70p bid price.

Top of the list of large engineers that could also receive an approach are Bodycote International (BOY) where the shares have slumped from 325p to 189p valuing the metal processor at £590 million. Swiss group Sulzer’s bid at 344.5p a share was (foolishly) rejected last April.

Analysts also believe other vulnerable groups include fluid controls company IMI (IMI), valued at £1.3 billion, structural steelwork group Severfield-Rowen (SFR), which slumped on a profit warning to 276p compared to a year high of 618p, and food equipment group Enodis (ENO), valued at £560 million.

Smaller outfits under the hammer include cigarette machinery specialist Molins (MLIN), industrial fastenings outfit Trifast (TRI) and chain specialist Renold (RNO).

Shares says: The industrial engineering sector has experienced a bloodbath in the last few months with many shares halving. But prospects have not deteriorated by nearly as much as the single figure PE ratings suggest.

HOLD FKI

by: Timon Day