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(Sharecast News) - Berenberg cut its rating on Rotork from 'buy' to 'hold' on Friday but hiked its price target from 420p to 503p, stating the ABB takeover terms had effectively capped further upside for the shares.
Rotork agreed to a 506p per share acquisition by ABB, representing a 73% premium to its close price, with the board set to unanimously recommend the offer. Berenberg said the bid price, which equated to around 19x enterprise value/underlying earnings and 21x EV/EBIT, was highly attractive and, given ABB's strategic fit and synergy potential, left little realistic scope for a counteroffer. With most of the value now crystallised, the broker moved its target price to sit in line with the bid level.
Berenberg noted that investor frustration over Rotork's growth profile, strategy and valuation had already prompted questions around potential activism or strategic interest, making the bid less surprising. Before the offer, Rotork traded on a roughly 16x 2026 price-to-ernings ratio and 12x EV/EBIT, reflecting Middle East headwinds and softer oilandgas investment.
The bid multiple, Berenberg said, highlights both the mispricing of Rotork and the broader undervaluation of highquality UK engineering assets with strong margins, pricing power and structural growth drivers.
The German bank added that the deal provides a supportive readacross for UK industrials, with peers such as Smiths Group, IMI, Weir and Spirax likely to attract renewed attention as investors reassess valuations across the sector.
Reporting by Iain Gilbert at Sharecast.com
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