BBA's pounds 258m Holvis bid trumps rival

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The Independent Online
BBA, the engineering and textile group, has made a Sfr466m (pounds 258m) bid for Switzerland's Holvis, a fibre maker and paper distributor, trumping an earlier offer from International Paper, a US company.

BBA has won the support of the Holvis management, which was looking for a white knight to forestall the American's Sfr400m bid. Holvis management rejected that offer as too low. BBA's offer came just three days after the original white knight, the US firm InterTech, pulled out because its intended partner, Arjo Wiggins, had switched sides.

In the event that the bid is unsuccessful, BBA has agreed to buy Holvis's fibre-making subsidiary, Fibreweb, which makes material used in nappies and sanitary products as well as medical equipment.

Fibreweb, which has operations throughout Europe and the US, is seen as offering a good fit with BBA's UK-based fibre-making business. BBA's chief executive, Roberto Quarto, said: "Fibreweb is a highly attractive business which falls squarely within one of our core activities. It will significantly strengthen our position in the international non-wovens market."

Holvis's other main business, Muehlebach, distributes graphic paper and office materials, mainly in Western Europe.

A statement from Holvis said: "The board's resolve all along has been to maximise shareholder value, and the offer from BBA achieves its objective."

BBA said: "Once BBA has acquired Holvis, it will review its options regarding Muehlebach which a number of potential purchasers have already expressed interest in acquiring." In the meantime the company says there is plenty of potential to improve margins.

Analysts welcomed the deal. One said: "It is a very good deal, a very good fit, it will enhance earnings and proves the company is on track." Another said: "It should mean a 10 per cent rise in the share price. It will add some pounds 10m to profits."

BBA's share price rose 17.5p to close at 235p.

If the deal goes through BBA's gearing will rise to 45 per cent, but the company is not concerned about this as it says earnings will be enhanced.

An acquisition had been anticipated by the City following the completion of its restructuring programme earlier this year. It also sold its automotive business, which left it with pounds 100m in cash.