Tomkins holds talks over £2.9bn takeover

INDUSTRIAL firm Tomkins is in talks over a potential £2.9bn takeover, it was revealed today.

The group said it had received an approach worth 325p-per-share from a consortium comprising US private equity firm Onex Corporation and the Canada Pension Plan Investment Board.

Tomkins - which started life in 1925 as a small British manufacturer of buckles and fasteners - has opened its books to the suitor and confirmed due diligence was now at "an advanced stage".

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Tomkins, whose range of products includes hosing and tubing as well as power transmission systems, employs around 30,000 staff worldwide.

There are 1,500 staff in the UK where it has six plants, including in Dumfries.

The group shed thousands of staff after suffering badly amid the recession and a slump in car and housing markets, with its significant US operations taking the brunt.

Its fortunes have since been revived by car scrappage schemes across the US and Europe, and Tomkins said today that sales soared around 23 per cent in the first six months of 2010.

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But the company added it was seeing signs of softening markets.

Sales in early July have been weaker than expected and it is forecasting the second half of the year to be worse than the first.

News of the takeover proposal follows speculation at the beginning of year that Tomkins was being eyed for acquisition.

The 325p-a-share potential offer would mark a premium on the group's 230p closing price on Friday.

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A former FTSE 100 firm, Tomkins has annual sales of more than 3bn.

The group said recent cost cutting and restructuring efforts have helped shore up profit margins, with underlying earnings of 290 million US dollars (190m) expected for the first half of 2010.

The business was founded as F.H. Tomkins Buckle Company and became a global engineering and industrial firm after embarking on a major expansion programme in the 1980s and 1990s.

Major acquisitions included the US-based Gates Corporation in 1996.

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