Redhall admits defeat in the fight for Mount

Wakefield-based Redhall said it will not be increasing its bid for Mount, ending an 18-day tussle with $5bn turnover Cooper.

AIM-listed Redhall added it is "disappointed" to concede defeat, but is considering other acquisitions.

York-based Mount's board switched its recommendation to favour Cooper's 19.2m bid, and said this gives shareholders the best "commercial" value.

Mount said Cooper's financial support will help it grow, as will the company's global network of contacts in engineering, procurement and construction.

Shares in Mount dipped 1.8 per cent to 82.5p while Redhall's shares ticked up 1.2 per cent to 126.5p.

Mount, a small engineering firm making threaded adaptors for the oil and gas industries, will cease to be an independent company providing another rival offer does not emerge and 75 per cent of voting shareholders accept Cooper's offer.

The business has a nominal head office in York, but the majority of its 80 employees work in the Midlands and Suffolk.

Redhall made a 16.5m offer for Mount on September 22 at 70p per share. Rival interest from Cooper emerged days later, and a week ago Cooper made a firm 82p a share offer.

"This outcome is disappointing given the complementary nature of Mount's activities, but we continue to seek earnings enhancing acquisitions," said Redhall yesterday.

The engineer had been chasing Mount for three to four months, and wanted the 9.3m turnover company to increase its manufacturing capability and cross-selling opportunities.

"I'm always looking at several things at any one time," said Redhall executive chairman David Jackson. "We obviously wanted the Mount deal but were not prepared to pay too much for it."

Asked if he believed Cooper would have outbid Redhall at any price, he said: "I'm sure they would."

The US group believes Mount will be a "good strategic fit" with its own products, some of which are used in hazardous areas. It also sees opportunities for the two companies to sell each others' products.

"I understand why they want it but what I'm surprised at is they have not found it for themselves," said Mr Jackson.

"I'm surprised that they are so interested in something so small (when) they are so large."

In 2004, Mr Jackson was on the losing side of another takeover battle, when Babcock narrowly won control of his Elland-based support services company Peterhouse. He has pledged to build Redhall into an even bigger business.

"I absolutely respond to the down, if you like, by just looking for the next up," he said. "I do not worry about the fact that we have not landed the business.

"I know that we are going to build this... over the next three to five years. There will be another deal.

"The amount of hours that we spend on acquisitions is phenomenal. That's my main focus."

Mount will pay Redhall an inducement fee for reneging on the deal.

Mr Jackson said while this will not cover all of the group's costs, "the loss won't be too much".

If the deal goes through, Mount said its chief executive David Stanham will stay on as managing director until at least the middle of next year. Its chairman Alan McClue, finance director Colin Davies, senior independent director Professor James Roach and company secretary Philip Ashworth will all resign.

Cooper has irrevocable undertakings from 9.8 per cent of Mount's shareholders backing its offer.

Group's healthy order book

Engineer Redhall said its order book remains strong and trading for the year has been ahead of 2009, although uncertainty clouds the next financial year.

The Wakefield firm said trading for the year to the end of September has been in line with management expectations.

"Whilst the board remains cautious about the prospects for 2011, it believes the strength of balance sheet, cash position and breadth of markets continues to position the group well for the future," it said.

Volumes and margins are under pressure in its process division due to tough markets. Redhall said it is cutting costs with an unspecified number of redundancies.

Its energy division has seen a "relatively subdued" market in nuclear decommissioning, offset by better trading in oil and gas.

Its defence business has grown revenues and profits but Redhall expects customers' budgets to come under pressure.