De La Rue confirms "opportunistic" bid approach

De La Rue, which prints money for the Government, said the potential offer - said to be worth around 750 million - was "highly preliminary and opportunistic".

It is thought French rival Oberthur Technologies is behind the bid move, which comes after shares in De La Rue have slumped by nearly a third following production woes in July with one of its biggest clients, believed to be the Indian Government.

The troubles claimed the scalp of former chief executive James Hussey and has cost the group 35 million.

The world's biggest banknote printer said volumes are set to drop 20 per cent this year following the crisis, which suspended production and a shipment of the affected banknote for two months.

The group posted a 57 per cent rise in pre-tax profits to 69.4 million in the six months to September 25 after the hit from the production issues was offset by the sale of assets and the closure of a pension scheme. It is unclear what affect the problems will have on its full-year accounts.

Shares in De La Rue raced as much as 26 per cent higher on news of the bid interest.

James Bishop, an analyst at Investec Securities, said there was potential for De La Rue to drive a good price for the business.

He said: "While the short-term quality problems are material, De La Rue has a very strong market position in a market that has little spare capacity to produce an obviously valuable product.

"We would, hence, expect a materially higher bid to be necessary to secure support."

De La Rue has claimed the production issues, which are believed to have taken place at a plant in Overton, Hampshire, were caused by some employees deliberately falsifying paper specification test certificates for some banknote customers.

It admitted that standards were not met, but has stressed that security features in the paper were not compromised.

The firm has carried out its own inquiry and passed a file to the Serious Fraud Office for investigation.

Chairman Nicholas Brookes has taken over as chief executive on an interim basis following the resignation of Mr Hussey.

The group said late last month that Tim Cobbold, the former head of industrial group Chloride, was its preferred candidate to head up the firm.

De La Rue not only prints banknotes, but also supplies security documents such as passports, authentication labels and fiscal stamps, and provides cash and sorting equipment to central banks.

It launched the new UK passport on schedule in October, which features complex images to help prevent fraud and has moved the holder's identity pages to the front of the book to help save time. The group was awarded the 400 million 10-year contract in 2009.