City expects Snell to trump pounds 4bn Lucas bid

THE CITY is expecting the chief executive of the US engineering group Federal-Mogul, Dick Snell, one of the most ambitious figures in corporate America, to trump the pounds 4bn agreed takeover of LucasVarity by its US rival TRW with an increased offer next week.

Industry analysts believe that Mr Snell, famed for his audacious and highly leveraged bids, will increase Federal-Mogul's tentative pounds 3.6bn offer for the car parts and aerospace group up to pounds 4.2bn, triggering a bitter bid war for Lucas.

Speculation of a clash between the two US engineering giants came as Lucas announced the closure of two plants in Swansea and Cincinnati with the loss of over 1,000 jobs.

In another blow to Lucas, the company's chief executive, Victor Rice, came under fire from a union leader who warned that his plans for an American deal could put the company's pounds 4bn pension fund at risk.

However, financial experts were focused on Mr Snell's next move. They predicted that the Federal-Mogul boss, who has promised to achieve his trumpeted "Big Hairy Audacious Goal (BHAG)" of $10bn (pounds 6bn) in sales by 2002, would raise its failed 280p cash-and-share bid to 310p per share.

The move would force Joe Gorman, the chairman of TRW - one of the biggest car parts manufacturers in the US - to raise its 288p cash offer. "Dick Snell is serious about Lucas. I think he'll come back with a 300p to 310p offer," said Mark Little, engineering analyst at BT Alex.Brown.

Mr Little added that Mr Snell would probably increase the cash element of the offer in a bid to appease Lucas's UK shareholders, who do not want to hold US shares.

Other analysts noted that a bold bid would be in line with Mr Snell's past strategy. Since joining from rival engineer Tenneco in 1996, the 57-year-old has spent over $5bn on takeovers, growing Federal-Mogul from a medium-sized player into an industry giant with expected 1998 sales of $7bn and 56,000 employees worldwide.

Two years ago Mr Snell stunned the UK engineering sector when he bought the brake-pads manufacturer T&N for pounds 1.5bn, when Federal-Mogul was valued at just $1bn. Since then he has bought the car parts unit of the US engineer, Cooper Industries, for pounds 1.9bn, and Fel-Pro - a gasket maker - for $720m.

Almost all the purchases included Federal-Mogul's highly rated paper and a high element of debt, provided by Mr Snell's many backers on Wall Street. The purchase of Lucas, which has a pounds 4bn turnover, would enable Mr Snell to achieve his "BHAG" well before time.

However, some analysts warned that Mr Snell risked overstretching Federal- Mogul's weak balance sheet. "After his acquisition spree, Dick Snell has $3.5bn of debt and gearing of 110 per cent," said one observer.

LucasVarity yesterday repeated that the TRW merger offered greater synergies than a deal with Federal-Mogul. Lucas has maintained that a tie-up of its brake business with TRW's steering wheel and airbag operations would enable the group to offer a complete package to the world's leading car manufacturers.

The company denied that the closure of its car wiring plant in Ystradgynlais, near Swansea - where more than 700 people would lose their jobs - and of a brake factory in Cincinnati were linked to the TRW takeover. A spokesman said the decision had been taken because of difficult conditions in the two markets.

The spokesman dismissed allegations by Roger Lyons, the general secretary of the white-collar MSF union, that the company's pension fund could be destroyed if Lucas were broken up by a US buyer.

Mr Lyons said he would urge Mr Rice to reassure Lucas's 40,000 pensioners that their fund would not be "raided" by a US buyer. "The fund is not the property of a predator coming in for the company, it is the property of the employees."

The Lucas spokesman said the MSF's fears were "unfounded" and added that the company would comply with UK pensions regulations.

Arts and Entertainment
Sheeran arrives at the 56th annual Grammy Awards earlier this year
musicYes, that would be Ed Sheeran, according to the BBC
Sport
Rio Ferdinand, Alan Shearer, Alan Hansen and Gary Lineker during Hansen's final broadcast
Sport
News
newsBear sweltering in zoo that reaches temperatures of 40 degrees
Arts and Entertainment
Brendan O'Carroll has brought out his female alter-ego Agnes Brown for Mrs Brown's Boys D'Movie
filmComedy holds its place at top of the UK box office
PROMOTED VIDEO
News
Ian Thorpe has thanked his supporters after the athlete said in an interview that he is gay
people
Arts and Entertainment
Professor Kathy Willis will showcase plants from the Royal Botanic Gardens at Kew
radioPlants: From Roots to Riches has been two years in the making
Arts and Entertainment
TV The follow-up documentary that has got locals worried
Arts and Entertainment
Eminem's daughter Hailie has graduated from high school
music
Arts and Entertainment
Original Netflix series such as Orange Is The New Black are to benefit from a 'substantial' increase in investment
TVHoax announcement had caused outrage
Life and Style
Swimsuit, £245, by Agent Provocateur
fashion

Diving in at the deep end is no excuse for shirking the style stakes

News
One Direction star Harry Styles who says he has no plans to follow his pal Cara Delevingne down the catwalk.
peopleManagement confirms rumours singer is going it alone are false
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
Curtain calls: Madani Younis
theatreMadani Younis wants the neighbourhood to follow his work as closely as his audiences do
Arts and Entertainment
'Deep Breath' is Peter Capaldi's first full-length adventure as the twelfth Doctor
TVFirst episode of new series has ended up on the internet
Life and Style
Douglas McMaster says the food industry is ‘traumatised’
food + drinkSilo in Brighton will have just six staple dishes on the menu every day, including one meat option, one fish, one vegan, and one 'wild card'
Sport
Mario Balotelli, Divock Origi, Loic Remy, Wilfried Bony and Karim Benzema
transfersBony, Benzema and the other transfer targets
Life and Style
Once a month, waistline watcher Suran steps into a 3D body scanner that maps his body shape and records measurements with pinpoint accuracy
techFrom heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Information Security Manager (ISO 27001, Accreditation, ITIL)

£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...

Biztalk - outstanding opportunity

£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...

Trade Desk Specialist (FIX, Linux, Windows, Network Security)

£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...

Service Desk Analyst (Windows, Active Directory, ITIL, Reuter)

£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...

Day In a Page

Iraq crisis: How Saudi Arabia helped Isis take over the north of the country

How Saudi Arabia helped Isis take over northern Iraq

A speech by an ex-MI6 boss hints at a plan going back over a decade. In some areas, being Shia is akin to being a Jew in Nazi Germany, says Patrick Cockburn
The evolution of Andy Serkis: First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes

The evolution of Andy Serkis

First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes
You thought 'Benefits Street' was controversial: Follow-up documentary 'Immigrant Street' has got locals worried

You thought 'Benefits Street' was controversial...

Follow-up documentary 'Immigrant Street' has got locals worried
Refugee children from Central America let down by Washington's high ideals

Refugee children let down by Washington's high ideals

Democrats and Republicans refuse to set aside their differences to cope with the influx of desperate Central Americas, says Rupert Cornwell
Children's books are too white, says Laureate

Children's books are too white, says Laureate

Malorie Blackman appeals for a better ethnic mix of authors and characters and the illustrator Quentin Blake comes to the rescue
Blackest is the new black: Scientists have developed a material so dark that you can't see it...

Blackest is the new black

Scientists have developed a material so dark that you can't see it...
Matthew Barzun: America's diplomatic dude

Matthew Barzun: America's diplomatic dude

The US Ambassador to London holds 'jeans and beer' gigs at his official residence – it's all part of the job, he tells Chris Green
Meet the Quantified Selfers: From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor

Meet the 'Quantified Selfers'

From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor
Madani Younis: Five-star reviews are just the opening act for British theatre's first non-white artistic director

Five-star reviews are just the opening act for British theatre's first non-white artistic director

Madani Younis wants the neighbourhood to follow his work as closely as his audiences do
Mrs Brown and her boys: are they having a laugh?

Mrs Brown and her boys: are they having a laugh?

When it comes to national stereotyping, the Irish – among others – know it can pay to play up to outsiders' expectations, says DJ Taylor
Gavin Maxwell's bitter legacy: Was the otter man the wildlife champion he appeared to be?

Otter man Gavin Maxwell's bitter legacy

The aristocrat's eccentric devotion to his pets inspired a generation. But our greatest living nature writer believes his legacy has been quite toxic
Joanna Rowsell: The World Champion cyclist on breaking her collarbone, shattering her teeth - and dealing with alopecia

Joanna Rowsell: 'I wear my wig to look normal'

The World Champion cyclist on breaking her collarbone, shattering her teeth - and dealing with alopecia
Bill Granger recipes: Our chef gives raw ingredients a lift with his quick marinades

Bill Granger's quick and delicious marinades

Our chef's marinades are great for weekend barbecuing, but are also a delicious way of injecting flavour into, and breaking the monotony of, weekday meals
Germany vs Argentina World Cup 2014 preview: Why Brazilians don't love their neighbours Argentina any more

Anyone but Argentina – why Brazilians don’t love their neighbours any more

The hosts will be supporting Germany in today's World Cup final, reports Alex Bellos
The Open 2014: Time again to ask that major question - can Lee Westwood win at last?

The Open 2014

Time again to ask that major question - can Lee Westwood win at last?