Canadian firm pays pounds 27.4m for ERF

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The Independent Online
Britain looked set to lose another part of its automotive heritage yesterday as ERF, one of the last remaining lorry makers in UK hands, succumbed to a pounds 27.4m bid from Western Star Truck of Canada.

The announcement of the recommended offer, worth 275p a share in cash, was accompanied by news that ERF's profits had sunk from pounds 2.28m to pounds 1.82m in the year to March following a previous profits warning.

The shares responded with a 7p rise to 280p, having risen from 238p on Wednesday when news of a bid emerged.

Peter Foden, the ERF chairman whose father founded the company in 1933, was remarkably unsentimental about the loss of the family business. "I suppose it is a family business, but you've got to be realistic in the world as it is today."

He, his three sons - one of whom is also in the business - and three grandchildren will share pounds 8.2m as a result of the sale of the business. Mr Foden himself will be around pounds 4m richer as a result of the deal.

But he said life as a small lorry maker was tough, given current market conditions. "I believe in the long term we need a strong partner and we need someone we can work with. Now it is very difficult to survive if your are small in the world heavy vehicle market."

ERF is Britain's fourth-largest lorry maker, lying behind Volvo, Scania and Leyland, with nearly 10 per cent of the heavy truck market. Western Star looks remarkably like ERF. It has a large controlling shareholder, buys in components from others rather than making them in-house and manufactures custom-built vehicles.

The chairman, chief executive and 50 per cent shareholder Terry Peabody who took control in 1991, said he hoped that Western's world-wide interests would increase the market penetration of ERF vehicles.

Western Star owns 4.5 per cent of ERF and has secured agreement from holders of 52.4 per cent of the shares ahead of the bid. Those accepting will retain the second interim dividend of 2.5p declared yesterday.

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