Melrose asks for more time after target Charter reveals presence of another bidder

Toolmaker Charter said on Tuesday it was in talks with an unnamed bidder, putting more pressure on Melrose to further raise a revised offer for the company it made in July, or walk away.

Melrose finance director Geoffrey Martin said yesterday “We want Charter to cooperate with us in terms of giving us due diligence and setting a timetable that is sensible for us, which would mean an extension to the current timetable.”

He added: “We are not reacting to yesterday’s announcement. If there is another bidder, then whatever information that bidder is getting, we will be able to receive.”

Melrose, which has had two approaches rejected by Charter, is prepared to offer 840p per share. It faces a September 6 deadline from Britain’s Takeover Panel to make a formal bid and will be prevented from bidding for Charter for the next six months if it misses the deadline.

The overall offer period to the September deadline would be almost 10 weeks from when Melrose made its initial announcement on June 29.

Singer Capital Markets analyst Jo Reedman said an offer from a competitor to ESAB, Charter’s welding tools business, seemed logical. “ESAB’s operations have underperformed recently, but the business is likely to become a stronger competitor if acquired by Melrose, given its track record of business investment and improvement.”

Melrose, which has grown by buying underperforming operations and turning them around, sold its Dynacast business during the first half after the unit posted a 32 per cent increase in revenue in 2010.