English China Clays agrees Imetal pounds 756m bid

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The Independent Online
THE BOARD of English China Clays yesterday accepted an increased offer of 250p a share in cash from Imetal, its French rival, just three weeks after rejecting an initial offer of 225p.

The new bid gives ECC's long-suffering shareholders 11 per cent more than the first offer. It is 56 per cent higher than the market price of the shares before the first bid was made last month, and values ECC at pounds 756m.

Imetal is only slightly larger in terms of market capitalisation but is a more diversified company with interests in metals as well as china clay.

Dennis Redeker, the ECC's chief executive, rejected the first bid as opportunistic and inadequate but, in the absence of a white knight, the ECC board recommended shareholders accept the increased offer.

ECC's management is half-way through a three-year programme of cost- saving measures aimed at adjusting to increased competition from low cost china-clay production in Brazil, the adverse impact of the strength of sterling, and a continuing low level of demand from the industry's main customers in the pottery, ceramics and paper producing industries.

The merger will create substantial cost savings and staff numbers at the ECC head office in Reading may be slimmed down.

But the main impact of any possible closures and redundancies is expected to fall on the two companies' US operations in Georgia. Subject to the approval of the supervisory board, Imetal is also expected to offer jobs to ECC's management.

Patrick Kron, the chief executive of Imetal, yesterday said he looked forward to welcoming ECC's management and employees to the combined group.

"We believe the enlarged group will become a low-cost producer in the industry, based on a wider product offering, a diversified base of reserves and better levels of research and product," he said.

Lawrence Urquhart, ECC's chairman, said: "I am confident that the combination of our two businesses will also bring significant benefits for both groups' employees and customers."