Melrose told to 'put up or shut up' over Charter bid
The Takeover Panel has issued a ‘put up or shut up’ deadline to manufacturing buyout firm Melrose giving it less than a month to make a formal bid for Charter International.
The deadline could be extended if Melrose, which has been stalking its prey for six weeks already, submits an offer the Charter board finds to its liking. Under the ruling, it has until September 6 to make up its mind.
The rules are designed to protect target companies from protracted ‘phony wars’ where they are subjected to the attentions of a predator, involving heavy costs to advisers and are a distraction from running the business.
Ruling: Melrose has until September 6 to make up its mind
From September 19, the Panel is introducing new tighter rules, brought in after the controversial takeover of Cadbury by Kraft.
Melrose, down 4p at 303p, made its original 780p a share overture to Charter, up 1.5p to 659.5p, earlier in the summer after a profit warning sent shares in the latter down by nearly a quarter.
Charter rejected the first approach and a second at 840p a share, valuing the company at £1.4billion.
Chairman Lars Emilson believes the Melrose bid undervalues Charter, which began life in the late 19th century and takes its name from the Royal Charter granted to it by Queen Victoria. However, Charter does not fit the mould of a great British engineering company.
It is registered in Jersey and has its headquarters and tax residence in Dublin, in order to minimise the amount it pays to the UK public purse, despite the Exchequer’s desperate need for revenues and moves by the Chancellor to make the corporate tax regime more attractive.
Its two main divisions are ESAB, an international welding and cutting company originally from Sweden and Howden, based in Scotland, which makes industrial fans.
Melrose was set up in 2003 to buy and fix underperforming manufacturers and sell them on at a profit. The firm, which has previously bought McKechnie and Dynacast, is understood to be keen to pursue its bid if it is allowed access to Charter’s books.
Leading shareholders including Schroders, which holds 8 per cent of Charter, have told Emilson they believe he should grant Melrose due diligence.
Aviva, which owns 5.2 per cent, has also said it cannot see why Charter is refusing Melrose access to its books.
Melrose said: ‘We are disappointed Charter has made this step and it appears they are not listening to the clear views of their shareholders.’
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