US Buyers Target Bargain UK Small Caps as AIM Market Shrinks Fast

London’s junior stock market endured another punishing week, as two more British businesses agreed to be bought by US-based bidders.

Ramsdens, the high street pawnbroker, saw its shares surge by more than 29 per cent after accepting a £206 million all-cash takeover offer from FirstCash, the Texas pawnbroking heavyweight.

Shareholders are set to receive 600p per share, along with a dividend of as much as 9p, putting the company on its highest-ever valuation.

The deal marks FirstCash’s second acquisition of a UK pawnbroker after its move for rival H&T, creating an expanded business with close to 470 stores across Britain.

Earlier the same day, Advanced Medical Solutions, which makes surgical adhesives and wound care products, agreed to a £659 million offer from H.B. Fuller, the world’s largest pure-play adhesives manufacturer.

Shares in the Winsford-based company climbed 19 per cent over the week, although the proposed price remains well below the level at which the stock was trading two years ago.

Together, the two takeovers point to a deepening concern for the City: well-funded foreign buyers are snapping up undervalued UK companies as London’s AIM market continues to contract, with departures through deals comfortably outstripping fresh listings.

It was a tough week for investors in the junior bourse, with the AIM All-Share down around 3.7 per cent, contrasting with a steadier performance from the FTSE 100, which nudged up 1.2 per cent.

With no apparent risk-off change in sentiment, one wonders whether punters have been spending their cash elsewhere, possibly on the SpaceX IPO, which has seen thousands of retail investors flee the market with badly burned fingers.

Mercantile Ports & Logistics was the week’s biggest winner with a 58 per cent gain. The propellant was a rather obscure update to a long-running legal battle in India.

Stake-building by an unknown investor through the IG trading platform boosted shares in the upmarket cinema chain Everyman, with the stock up 26 per cent.

Fletcher King jumped 25 per cent after the property services group announced a 20p special dividend of £2 million.

Kazera Global rose 24 per cent after the investment company struck a $10.5 million settlement with Hebei Xinjian Construction over the Aftan arbitration award, paving the way for total receipts of roughly $14.6 million and an 80 per cent cash return to shareholders.

Onto the fallers. Talon Resources endured a bumpy debut on AIM, falling 58 per cent as it switched from a Main Market cash shell to become a fully-fledged gold explorer. 

Still, the long-term picture looks encouraging, with ambitious exploration plans focused on the Eagle Lake project in Ontario, where historic work uncovered bonanza-grade gold in excess of 200 grams per tonne.

EEnergy fell 42 per cent after the energy-saving services group slashed full-year guidance, with new interim boss John Gahan finding its sales pipeline had been materially overestimated. It now expects £32 million revenue against £38 million previously, and has launched a restructuring to cut costs by almost a third.

Filtronic tumbled 30 per cent, even though the news looked perfectly good on paper.

The maker of radio frequency products for the space and defence industries said full-year profits would land slightly ahead of expectations, and unveiled a fresh contract to supply satellite technology to a US customer.

But the stock had already doubled this year, and investors were clearly hoping for more to justify the price.

Finally, helium might be the gas that fills party balloons, but it is also a strategic commodity used in semiconductor production and MRI scanners. It is in short supply, and one small explorer finds itself at the vanguard of a new wave of prospectors hoping to meet rampant demand.

Oak Securities has begun covering Quantum Helium with a high-conviction ‘buy’ rating and a 0.064p target, implying 113 per cent upside.

The broker says the explorer has reshaped itself over 18 months into a US-focused player on Colorado’s Four Corners helium fairway.

At its Sagebrush project, a well is already producing gas with helium concentrations well above commercial levels, while neighbouring Coyote Wash offers far bigger potential.

With more than $8 million in the bank and tight global supplies, Oak reckons an exciting period lies ahead.

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