Bidding war as US giant makes move for Mount

York-based Mount, a small engineering firm making threaded adaptors for the oil and gas industries, is caught in a bidding battle between $5bn turnover Cooper Industries and AIM-listed Redhall.

Yesterday Cooper Controls (UK) Ltd, a subsidiary of the US giant, made an 82p per share offer to beat Wakefield-based Redhall's recommended 70p per share bid by 17.1 per cent.

Kirk Hachigian, chairman, president and chief executive of Cooper Industries, said: "We believe that Mount is a good fit with the Cooper Group and brings a strong range of complementary products that should create cross-selling opportunities.

"We believe we can provide the right business environment and resources to continue to invest in, grow and develop Mount."

Shares in Mount climbed 8.4 per cent to close up 6.5p at 84p.

But Mike Foster, analyst at Fairfax IS, questioned the logic of Cooper's bid despite its financial firepower.

"Mount Engineering and Cooper Industries are not in the same end market and seem to be in different engineering disciplines, Cooper in electrical and Mount in mechanical," he said.

"Redhall could also offer strong investment capability (given cash held) and would, we would argue, have more aligned product and cross-selling opportunities."

Mount has urged shareholders not to do anything while it assesses the latest offer. The business has a nominal head office in York, but the majority of its 80 employees work in the Midlands and Suffolk.

It said while it is "unable to make a formal recommendation" of the Cooper offer until at least five days after its approach, it notes the premium to Redhall's offer.

Mount added previous irrevocable undertakings by shareholders backing Redhall's bid, other than those made by management, are no longer binding.

"At this time the board recommends that shareholders take no action with regard to any offer for the group," said Mount in a statement.

Redhall revealed its 16.5m offer for Mount, a manufacturer of components for hazardous industries, on September 22. Rival interest from Cooper then emerged late on Monday, when another subsidiary, Cooper Safety, initially said it was considering an offer of at least 78p per share.

Cooper said it hopes to win a recommendation from Mount's directors as soon as they are released from contract.

It plans to pay for Mount using its cash resources. Cooper added it plans to grow Mount, and respects its employees' rights, but will consider whether to sell or keep its valve business.

Redhall focuses on safety critical products and services spanning the nuclear, oil, gas, food, defence, safety and security and transport sectors. It wants to buy Mount to increase its manufacturing capability and cross-selling opportunities.

Mr Foster said Redhall's proposal offers "impeccable industrial logic with a similar safety-engineering focus", adding he believes Redhall could make a higher offer.

He added: "Operationally, this is a bigger move for Cooper Industries and, though initial due diligence has been completed, there is a possibility that further due diligence might be required and the Mount directors, who recommended the initial Redhall bid, may find Redhall to be a safer or at least more recognisable parent."

Earlier this week Redhall chairman David Jackson insisted he is not giving up in his pursuit of Mount, adding he has been chasing the company for about four months.

"It's a bit like David and Goliath, but I seem to recall David won," he said. "I cannot see what it does for them (Cooper)."

The Yorkshire Post was unable to contact Cooper Industries for comment.

Leeds law firm Hammonds is advising Redhall. Dickinson Dees in York is advising Mount.