Charter Rejects Melrose's Improved GBP1.4 Billion Takeover Bid
16 July 2011 - 12:15AM
Dow Jones News
Engineering firm Charter International PLC (CHTR.LN) said Friday
that it had rejected an improved GBP1.4 billion takeover bid from
Melrose PLC (MRO.LN), saying it still believes the industrial
turnaround specialist's approach is "opportunistic."
Melrose had returned with a 840 pence-a-share indicative
proposal for the company on July 11, besting its 780 pence-a-share
offer from late last month, but Charter again dismissed the
cash-and-share bid as undervaluing the company and its
prospects.
Charter said that the revised proposal did not reflect its
belief that the market was undervaluing the company's prospects
after it issued a profit warning last month because of the poor
performance of ESAB, one of its core businesses.
Charter said the bid failed to reflect its confidence that ESAB,
a specialist in welding, cutting and automation, would see
substantial operational improvement under its new management
team.
Charter added that the bid also didn't take into account the
strong performance and growth prospects of its other core business,
air and gas handling firm Howden.
Melrose, which looks to acquire and turnaround underperforming
engineering businesses before selling them on, has been circling
Charter because of its recent difficulties, which included the
resignation of its Chief Executive Michael Foster.
Melrose said Thursday its approach was in the best interests of
Charter shareholders as it "delivers a proven management team with
a demonstrable track record in creating value... along with an
immediate 40% premium [compared to the day before its original
approach]."
Jo Reedman, analyst at Singer Capital Markets, said earlier
Friday said that "Melrose's approach is not necessarily a knock-out
bid," and suggested a maximum price of around 950 pence-a-share if
Charter were to become the subject of a competitive auction.
"We would expect the management of both Lincoln Electric
Holdings Inc. (LECO) and Illinois Tool Works Inc.'s (ITW) welding
businesses to be concerned about the prospect of ESAB being
acquired by Melrose," Reedman added.
At 1335 GMT, Charter shares were up 0.1% to 830 pence, while
Melrose shares were up 0.1% at 360 pence.
-By Michael Haddon, Dow Jones Newswires; 4420-7842-9289;
michael.haddon@dowjones.com
Lincoln Electric (NASDAQ:LECO)
Historical Stock Chart
From Apr 2024 to May 2024
Lincoln Electric (NASDAQ:LECO)
Historical Stock Chart
From May 2023 to May 2024