The bid sent the Renfrew-based group's shares soaring yesterday, leaving them 36.5p higher at 128p, around 3p lower than the offer terms of pounds 124.78 in cash and three Charter shares for every 115 in Howden. Charter's shares were also strong, rising 60p to 847.5p.
The deal comes just five days after a jump in the share price prompted Howden to issue a statement that it had not received any approaches. Charter made its first contact on Monday afternoon, but did not tie up the deal until Thursday night. Both the company and the Takeover Panel, which was kept informed, said yesterday they were satisfied that all the rules had been followed.
John Jackson, the chairman, did not rule out the possibility of a higher offer, but Charter, which has been stalking Howden for six months, was confident yesterday that its offer would prove a knock-out. Jeff Herbert, the chairman and chief executive, said this was an attractive offer for Howden's shareholders, while the deal would be earnings-enhancing for Charter in its first full year.
The group has been looking to add a third leg to the business for at least a year in the wake of the successful pounds 286m purchase in 1994 of Esab, the Swedish company which leads the world in welding consumables. Last June's sale of a majority stake in Cape, the building materials company, left Charter with net cash of pounds 36.5m at the end of December.
Mr Herbert said Howden's core business of building fans for uses ranging from mine ventilation to air conditioning in battle tanks "fitted like a glove" their acquisition criteria. There were "exciting opportunities" for growth. It was rare to find a case like this where a market leader earned lower margins than its rivals, he claimed.
He said they would review the other Howden businesses, which range from equipment used in digging the Channel Tunnel to pasta-making extrusion machinery.
On Tuesday, Charter announced profits had slumped from pounds 97.5m to pounds 46m last year.Reuse content