Britain's Chloride rejects takeover bid
LONDON—Shares in Chloride Group PLC, Europe's largest maker of backup power supplies, soared 35 percent after the company rejected a preliminary $1.3 billion takeover approach from U.S.-based rival Emerson Electric Co.
Britain's Chloride, which specializes in maintaining uninterrupted power to information technology systems, said that the preliminary approach of an all-cash offer of 255 pence ($4.99)per share for a total of 657 million pounds "materially undervalued the company and its prospects."
"Accordingly, it was not in the interests of Chloride and its shareholders and the board has rejected it," the compoany said
Chloride did not name its suitor but St. Louis-based Emerson Electric later revealed it was the bidder, saying it made its first approach to the board of the British company on March 18.
Emerson added that it has provided no "firm intention to make an offer," adding it would make a further announcement "in due course if appropriate."
Even with that qualification, investors' expectations that the price will go higher spurred the shares to a two-decade high. The stock closed at 280 pence ($5.49).
ABN Amro analyst Sue Cox said that recent deals in the sector, such as Schneider Electric's $6.1 billion purchase of American Power Conversion Corp. in 2006 indicated that a bidder for Chloride would have to pay at least 288 pence ($5.64).
Chloride is an "excellently managed business in a fast growing, business-critical area," she said.
"We have long talked of Chloride as being a potential bid candidate," Cox said in a note. "Anyone wanting to bid for this jewel of a company will have to pay up."
The company's customers include banks HSBC Holdings PLC and Barclays PLC, retailers J Sainsbury PLC and Ikea and energy companies BP PLC and Total SA.
Chloride said it believes it has "a robust business model, clear strategy and strong positions in geographies and higher growth market sectors -- including IT services, data centers, energy and oil & gas -- where secure power is increasingly critical to business continuity."
"Accordingly, the board considers the company to have excellent prospects as an independent group," it added.
Analysts had named U.S.-based Eaton Corp. and France's Schneider Electric SA as potential bidders alongside Emerson.
Chloride had to make a statement by market rules after speculation drove its shares more than 25 percent higher.
