Money Maker's Bad Week Worsens as Blue Passports Go Dutch
(Bloomberg) -- It’s been a torrid week for De La Rue Plc, the 200-year-old printer of bank notes whose shares slid 14 percent two days ago after the sudden departure of its finance chief was accompanied by an unexplained profit warning. The stock tumbled once more on Thursday after the company said it lost a contract to make British passports post-Brexit.
Chief Executive Officer Martin Sutherland told the BBC’s Today program that Franco-Dutch firm Gemalto N.V. will produce the passports at a facility in France, confirming that De La Rue’s contract hadn’t been renewed.
“It’s been the case since 2009 that we do not require passports to be manufactured in the U.K.,” the U.K. Home Office said in an emailed statement, adding that a proportion of passports have been made since then without any security or operational concern.
“The preferred bidder has been selected following a rigorous, fair and open competition and all bidders were notified of the outcome last night,” it said, without identifying the winner by name. The preferred bid could save the taxpayer 100 million pounds ($141.6 million) to 120 million pounds, depending on the number of passports produced during the lifespan of the contract, the office said.
“The process is still ongoing and the terms of engagement are confidential,” Gemalto, based in Amsterdam with operations in France, said in an emailed statement.
De La Rue was down 4.9 percent at 479.50 pence as of 1:46 p.m. in London, extending declines for a fifth day to 23 percent. Gemalto shares fell 0.2 percent in Amsterdam.
Prior to this week, De La Rue’s shares had risen more than 30 percent in the aftermath of the Brexit vote. The company had said sterling’s depreciation would benefit its export business, given it also produces banknotes for foreign countries, including several in Africa. It’s also been responsible for the U.K.’s new polymer five and 10-pound notes issued over the past two years, and will print the new 20-pound note in 2020.
Britain is set to reintroduce blue passports, which it swapped for the European Union-standard burgundy upon joining the trading bloc, in a move that Prime Minister Theresa May called an “expression of independence and sovereignty.”
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