Henlys' US deal could spark bid by Volvo
Henlys said that the Swedish motor giant, which holds 10 per cent of Henlys, would take up $255m in new convertible 10-year loan notes to help finance the proposed US deal. The notes hold an anticipated conversion premium of 20 per cent over the theoretical price of Henlys shares - allowing Volvo to raise its Henlys stake to 30 per cent, triggering a takeover.
"The conversion does give them the chance, if they fully convert - at the end of the day it is a decision that they have to take,'' Henlys chief executive, Robert Wood, said.
Volvo picked up the 10 per cent stake in August 1998 as Henlys sought to bid for bus and truck chassis maker Dennis Group. That bid failed as Dennis was bought by rival Mayflower Corp.
Steve Medlicott, analyst at Albert E Sharp Securities, said: "It [a Volvo move for Henlys] is going to happen at some stage, but not in the initial term."
The Blue Bird deal, which won a broadly positive reaction from City analysts, will give Henlys a 40 per cent share of the US school bus market. Blue Bird also manufactures luxury recreational vehicles and medium-duty commercial buses.
Henlys said it would finance the move with fresh borrowing of $400m; an equity placement worth at least $100m and the Volvo-held notes.
Under the terms of the deal, Henlys will pay $428m for the Georgia-based firm, and repay its $237m debt.
Blue Bird, which is owned by Merrill Lynch Capital Partners and Blue Bird management, reported profit before tax of $21.3m on sales of $237.3m in the six months to 1 May.
Henlys said it would sell its products through Blue Bird's 65-centre US distribution network, and raised the prospect that Blue Bird's output could be offered through Volvo's 60-country network.
Analysts said that the proposed deal would fit well with Henlys existing North American holdings: it holds stakes in bus-shell manufacturer Prevost, and Nova Bus, which produces transit buses.
Under stock exchange rules, the transaction will constitute a reverse takeover. Henlys shares were suspended at 570p.
- 1 Renee Zellweger on plastic surgery reports: 'I'm living a fulfilling life and I'm thrilled that perhaps it shows'
- 2 Disney announces new female-led film Moana
- 3 Banksy not arrested: Internet duped by fake report claiming artist's identity revealed
- 4 Australian café owner sparks debate after saying 'No' to having unruly children on premises
- 5 Video: Boxer Vido Loncar brutally assaults referee following defeat
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Of course, teenage girls need role models – but not like beauty vlogger Zoella
Residents should throw a street party and mix with immigrant neighbours, councils told
Russell Brand threatened with arrest after filming outside Fox News headquarters
London bus driver 'kicks gay couple off for kissing'
Support for EU membership 'at highest level since 1991 with most Brits wanting to stay in'
iJobs Money & Business
£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...
£18000 - £23000 per annum + Commission: SThree: The SThree group is a world le...
£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...
£20000 - £25000 per annum + OTE £Competitive: SThree: SThree Group and have be...