The market raid on Bridon's shares was successful, netting FKI 22.33 million shares, equal to a 29.9 per cent stake in Bridon. The big institutional sellers included PDFM, M&G Investment Management, Britannic Assurance and Gartmore.
The takeover has been pitched at 175p for each share in Bridon, which is based in Doncaster. The bid price is 25 per cent above the market price of Bridon shares at the close of business on Friday, and represents a 65 per cent premium over the price on 27 June - the day before the two sides announced talks were being held.
A loan note alternative paying 1 per cent below Libor will be available if demand for it tops pounds 5m.
Brian Clayton, Bridon's chairman, said yesterday that the deal made sound industrial logic. FKI's chairman, Jeff Whalley, said the acquisition was in line with the company's industrial strategy. Bridon has 3,500 employees and a dozen manufacturing sites, five of them in Yorkshire and the North- east of England. It also has 125 distribution outlets world-wide. The head offices will be merged but most, if not all, of the sites and employees will be kept on.
Some pounds 300m of Bridon's annual turnover of pounds 362m in 1996 fits perfectly with FKI's existing chain and lifting gear business. The Bridon distribution system will also help increase sales of FKI products, according to the company's chief executive, Bob Beeston.
The deal, though, runs contrary to comments by FKI last month that after having spent pounds 280m on acquisitions it had established the base for organic growth without the need for further acquisitions. At the time it reported a 24 per cent growth in profits to pounds 112m, including organic growth of 14 per cent. Mr Beeston said yesterday, however, that a takeover of Bridon had been in the pipeline for the last four years.
Bridon has had a difficult few years trading. Last year it made a profit of pounds 7.3m, after reporting a small loss in 1995. Asset value is 146p a share and the exit price is 17 times this year's prospective earnings per share of 10.3p. The current year had got off to a good start, Mr Beeston said yesterday.
The acquisition costs will increase FKI's gearing to 114 per cent, but will be earnings-enhancing for FKI in the first year according to Mr Beeston. Shares in FKI, which is also taking on pounds 40m of debt, fell 3p to 157.5p.
The chairman and non-executive directors of Bridon will step down, and FKI will decide within the next month whether it wishes to keep on any or all of the four executive directors. If not, they will leave on the terms of their existing contracts.