Heseltine clears bid for Manders

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The Independent Online
KALON, the Yorkshire-based paint company, has been given the green light by the competition authorities to pursue its hostile bid for Manders.

The Office of Fair Trading halted the bid process a week ago while it looked at the takeover proposals.

Yesterday, the 60-day bid clock was restarted as Michael Heseltine, President of the Board of Trade, decided not to refer the offer to the Monopolies and Mergers Commission.

Competition concerns centred on the supply of paint to DIY stores like B&Q and Texas, which label the paint as their own. Manders argued that if Kalon succeeded in its takeover bid the new enlarged group would command 70 per cent of the own-label market.

The Kalon contention - which was accepted - was that own- label and branded paints like Dulux should be counted as one market. Kalon and Manders together would control 20 per cent of that bigger market. Manders also owns an ink operation and a shopping centre, worth pounds 57m, in its Wolverhampton base.

The bid is eight Kalon shares for every three Manders. When the bid was launched in June it valued Manders at pounds 108m. Falls in Kalon shares, with the market, have depressed the total value of the offer by 18 per cent to pounds 88.5m.

Kalon shares were unchanged at 90.5p yesterday, making the offer equivalent to 241p. Manders shares rose 10p to 239p, an indication that the stock market expects the bid to succeed.

Manders said it was disappointed that a reference was not made, but said the offer undervalued the company.

Kalon said Manders was hoping to get a reference to 'frustrate' a bid it could not defend using its own recent performance.

Tomorrow, Manders will publish interim results to 30 June.

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