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Shares in Europe’s second-biggest armaments maker, Czechoslovak Group (NL:CSG), dropped by 13 per cent on Monday after short seller Hunterbrook Capital accused the company of misleading investors in its recent IPO about its ammunition capacity.

The firm also alleged it had failed to disclose that a minority shareholder of a key subsidiary, CSG Land Systems, is seeking €1.4bn from the company for his 10 per cent stake, and that he held “extraordinary rights” over a business that produces “nearly two-thirds” of the group’s revenue, including an ability to block decisions.

Hunterbrook alleged that most of the group’s ammunition sales comes from re-selling old weapons as opposed to making new ones. The company denied the allegations, stating that it “stands by the integrity and accuracy of its IPO documentation and all post-IPO communications”. 

Broker Jefferies said that CSG had disclosed in the prospectus that 50-60 per cent of its medium- and large-calibre ammunition revenue comes from recommissioning and partnerships (supply of components to peers) but that it expected this figure to fall to 10-20 per cent over the medium-term as it produces more in-house. 

It added that while the minority shareholder, Petr Kratochvíl, has exercised a put option for his stake, the value is heavily contested (the company has reportedly offered one-tenth of this amount). 

We featured CSG as one of our InvestorsChronicle of the Week in the latest edition of Investors’ Chronicle, which was based on the company’s disclosed numbers. The short report means the shares have clearly taken a knock but if it delivers the type of growth that analysts still expect then this should make little difference to the long-term case.

Vodafone (VOD) will take full ownership of the joint venture with Three, at a cost of £4.3bn. The telco currently holds 51 per cent of VodafoneThree, after the combination of the two network operators last year. The deal is being done at an equity value of £8.8bn, with £5.1bn in net debt taking the enterprise value to £13.9bn.

Vodafone said the deal would be funded from cash. This is just one demand on the balance sheet as the company is currently also in the middle of a €500mn (£432mn) buyback programme. To balance things out, it also sold a 50 per cent interest in Dutch subsidiary VodafoneZiggo for €1bn earlier this year. Management is expecting free cash flow of around €2.5bn for the 12 months ended 31 March in full-year results to be published next week.

“A year on from the merger, the team has made remarkable progress, as we maximise the full potential of VodafoneThree and capture the significant synergies,” said chief executive Margherita Della Valle. The company said there had already been “considerable improvements” to network quality since the merger completed last year. Vodafone shares were flat on the news.

Shares in Intertek (ITRK) rose 7 per cent this morning after Swedish private equity group EQT (SE:EQT) said it had submitted a third and improved takeover bid for the FTSE 100 testing specialist. 

EQT’s third proposal is for £58 a share in cash, valuing the company’s equity at £8.9bn. The sweetened offer represents a premium of 54 per cent to Intertek’s closing share price of £37.7 on 9 April, the day before the firm filed its initial proposal of £51.5 a share. 

The second offer was raised to £54 but also rejected, with the board saying it “fundamentally undervalues” Intertek and its prospects. The company is also reviewing options to separate its energy and infrastructure business, either through a sale or demerger.

“EQT believes this further increased proposal delivers certain and accelerated cash value for shareholders, superior to the range of outcomes associated with Intertek’s standalone prospects,” EQT added. The group has until 14 May to make a firm offer or walk away.