De La Rue Rues Loss of U.K. Passport Contract But Won't Appeal

(Bloomberg) -- De La Rue Plc, the 200-year-old company that prints British passports, said it won’t appeal the U.K. government’s decision to award a contract post-Brexit to a Franco-Dutch rival.

Having considered “all of the legal and commercial implications,” an appeal is not in the best interests of the company, De La Rue said in a statement Wednesday. “We remain both surprised and disappointed by the decision of Her Majesty’s Passport Office to award the contract to a competitor.”

The prospect of U.K. identification documents being produced by Gemalto NV -- a Dutch-listed firm with operations in France -- has drawn sharp criticism from supporters of Britain’s decision to leave the European Union and derision from the tabloid press. As it prepares for the U.K.’s departure, the government is reverting back to the iconic blue cover, rejecting the EU’s standard burgundy in an “expression of independence and sovereignty.”

Shares of Hampshire, England-based De La Rue fell as much as 9.4 percent in early trading on Wednesday after announcing its decision not to appeal. It doesn’t expect the loss of the contract to affect its performance over the next 18 months, but said it’s cautious about the outlook for the full year.

De La Rue now expects underlying operating profit for the year ended March 31 to be in the low to mid 60 million-pound range ($85 million), which compares to the 70.7 million pounds it reported the year earlier. The cost of bidding for the passport tender was about 4 million pounds, it said.

The stock traded down 4.1 percent at 472 pence as of 9:56 a.m. in London, near a two-year low. Gemalto traded up 0.2 percent in Amsterdam.

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