Laporte wins Evode with agreed bid worth 129m pounds

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WASSALL threw in the towel yesterday after Laporte, the chemicals group, made its expected counter-bid for Evode, maker of Evo-stik, with an agreed all-share offer worth pounds 129.3m.

Although the bid terms value Evode at 37 times earnings Ken Minton, Laporte chief executive, said it would enhance Laporte's earnings in the first year.

Laporte is offering 23 of its shares for each 112 Evode ordinary shares, valuing them at 120p. Before Wassall made an initial 80p- a-share offer in November Evode shares were trading at 55p.

There is an offer of five Laporte shares for every 28 Evode preference shares, valuing them at 104p. Laporte's adviser, Schroders, is underwriting a cash alternative of 115p and 100p for ordinary and preference shares respectively.

Last night Laporte, following share purchases, claimed 20.6 per cent of Evode, including 8.3 per cent irrevocable acceptances by Evode directors.

David Roper, Wassall's finance director, said: 'Obviously we're disappointed not to have won, but we wish Laporte the best of luck.' Wassall had increased its offer for Evode to 95p on Tuesday, provoking Laporte to announce that it was close to making a recommended bid at above pounds 1 a share.

Mr Roper said that Wassall would make a profit of about pounds 1m on its Evode stake before costs.

Andrew Simon, chairman of Evode, whose 3 per cent holding is now valued at pounds 2.5m, will join Laporte as a non-executive director.

Mr Minton said that elimination of Evode's head and divisional office support overheads could save millions of pounds.

By slimming down its product range, improving prices and cutting raw material costs, the aim was to increase Evode's profit margins, currently 4 per cent, bringing them closer to Laporte's margins of 14 per cent.

Laporte is forecasting pre-tax profits of not less than pounds 86m in the year ended 3 January, compared with pounds 97.2m. A final dividend of 12.5p is also expected, making a total of 19.5p (18.9p).

Separately, Laporte announced the acquisition of Silo of Italy, the fourth-largest maker of synthetic iron oxide colouring pigments, for pounds 6m and the assumption of pounds 17m of debt. Laporte will take a 50 per cent interest and buy the remaining 50 per cent during the year subject to Silo's performance.

Laporte is also placing, subject to clawback, 15.4 million shares at 560p to raise pounds 84.4m.