Melrose may pay more for Charter

Manufacturing buy-out firm Melrose said it would consider making a higher proposed offer for Charter International if it were given access to the British engineering company’s books.

Melrose also said it would not be appropriate to proceed with an offer without it being allowed to undertake due diligence.

“Melrose is willing to consider increasing its proposal to reflect any information which demonstrates that it has materially undervalued Charter and justifies such an increase,” it said.

Hide Ad
Hide Ad

The company’s latest proposed bid, made earlier this month and pitched at 840p per share, is eight percent higher than its previous indicative approach.

That offer, however, is still at the level Charter shares were trading at in May, before falling sales and management issues pummelled the stock.

Charter rejected the offer that valued it at about £1.4bn and said the increased bid still undervalued the company. It also named a new chief executive and said it would look at all alternatives.

Analysts say Charter could be worth more than 900p per share, and a shareholder told Reuters earlier this month that Charter was trying to “flush out white knights”, including rival Lincoln Electric, which is based in the United States.

Hide Ad
Hide Ad

Singer Capital Markets analyst Jo Reedman said: “We estimate a maximum price of 950p per share if an offer from a third party is received and Charter becomes the subject of a bidding war,” .

A shareholder in Charter said Charter should allow Melrose access to satisfactory due diligence.

“I don’t see how Charter can not respond by opening their books, as Melrose has even said they will pay more if there’s something good in there worth paying for.”

Related topics: