With a takeover bid in the offing now is the time to get into this property company’s shares, argues Mark Watson-Mitchell.
Yesterday, Mike Slade confirmed weekend reports that his property group Helical (LON:HLCL) has recently received approaches.
Rising some 34p to close at 389p last night, the company’s shares now look to be substantially undervalued and very exciting. They are trading at around that level today.
The fact that there are strong market rumours of a possible £500m bid in the offing shows that the company, now capitalised at just over £450m, could soon be in play.
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And I reckon that there is at least 100p a share for bid punters to go for by getting in now, even though yesterday’s statement from Mike Slade helped to push the shares up to a year high.
In fact, there could well be even more in it than just 100p a share.
After all, the recently announced results recorded that the group’s net assets were valued at £567m as at the end of March this year.
Just to give you a clear steer – I love Slade and Helical!
That man is magic, but, unfortunately, at the tender age of 72, he has stated that he is due to retire his non-executive Chairmanship at the forthcoming AGM to be held in The Connaught Hotel on Thursday 11thJuly.
Some 35 years ago I had built up a stake of about 8% in a tiny ‘shell company’ called Helical Bar. Motoring fanatics will know that a helical bar is a coupling rod. But that was not what fascinated me about the company – I was just playing it as a potential vehicle for another to use in due course.
I took my profit when a good price was offered by the market. I think that that may well have been when former estate agent Slade moved in on the company.
By chance, I met him a year or so later when he was the guest speaker at one of our Insider Club dinners in the City.
He came across extremely well and I was certainly impressed, especially as he detailed his aspirations for his fledgling company that he now controlled.
I did a few sums and started taking out a mass of options on the stock – which paid off handsomely when exercised some months later. The shares moved up from 200p each to over £16 in that timeframe. That was in their old form.
I even suggested and bought a slice of another property company for Helical when he gave me discretion on spending up to £500,000 in doing so. He honoured his word – and I took the company out of that new position inside 10 days giving it over a £100,000 profit in doing so.
He is a very keen yachtsman and a real gentleman and I, for one, will be sorry to see him leave the PLC scene.
But back to Helical, whose core business is developing and owning dynamic, well located office space in London and In Manchester. Its portfolio of buildings and developments is split 86% in London and 14% in Manchester.
In its developments on hand, London offices makes up 23.9% of its £59.8m portfolio, whilst London residential is 71.7%, with regional retail at 1.4% and holding land at 3%.
Its £816.6m of investment properties, which make up 93.2% of the entire Helical portfolio, is 85% in London offices and 15% in Manchester offices.
Slade has, over the years, built up a very able team to run the property group and they are more than capable to continue to do so for whichever company manages to win through, in what I consider will be an interesting takeover battle that may ensue.
Unless, of course, an agreed offer transpires.
Mike Slade owns about 10.20% of the group, whilst professionals in behind him include: Baillie Gifford (6.83%); Henderson Global (6.17%); Merian Global (5.16%); Norges Bank (4.83%); Dimensional (4.27%); Schroders (4.08%); Aviva Investors (3.99%); BlackRock (3.22%) and M&G (3.10%).
I reckon that Helical is now in play and there could easily be a fairly short-term gain of 25% plus to be gained in any takeover fray that follows.
With the shares now at 389p, the risk is of no bid actually coming about, otherwise the near-term upside looks incredibly magnetic.