British Vita captures Doeflex for pounds 66m cash

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The Independent Online
BRITISH VITA, the acquisitive Manchester-based plastics manufacturer, yesterday announced a pounds 65.9m cash bid for the rival plastic sheet maker, Doeflex.

Jim Mercer, the chief executive of British Vita, has been pressing Doeflex to accept a takeover deal for the past two years and discussions have been going on for some months. But, after the stock market's recent falls, Doeflex's management has decided to accept the money now rather than wait another year for a substantial investment programme to benefit the bottom line.

The bid values Doeflex at 375p a share, 58 per cent higher than the shares' closing price on 27 August when the company announced it was in talks that could lead to a bid. It is 15.6 times Doeflex's earnings of 24p per share in the year to the end of December 1997, although Doeflex also yesterday reported a 12 per cent rise in operating profit in the half year to 30 June and was expected to earn 26.8p a share in the current year.

British Vita has irrevocable acceptances for over 21 per cent of the shares and clinched its bid with market buying yesterday. The acquisition brings British Vita's total acquisition bill to pounds 145m in the current year. Doeflex will be earnings-enhancing in the first year, British Vita said yesterday.

Doeflex has six plants making thermoplastic sheeting in the UK and one in Belgium. It has 500 employees. The business makes an excellent fit with British Vita, both in terms of products and markets. However, there should still be cost savings of pounds 2m to pounds 3m over the next two years, largely resulting from the closure of the Doeflex head office.

British Vita announced a 9 per cent increase in sales and a 15 per cent jump in profits to pounds 36.8m in the six months to 30 June, helped by its strong presence in continental Europe, where operating profits rose 30 per cent.

The cost of British Vita's raw materials has fallen, and although the pound remains strong the company's relevant exchange rates have deteriorated only slightly in the past year. The shares have fallen by a third in three months, but rallied yesterday to close at 230p.