Leigh agrees to pounds 116m takeover

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The Independent Online
General Utilities, owned by the giant Generale des Eaux of France, yesterday launched an agreed bid for Leigh Interests, less than three weeks after making its first direct approach for what is one of the UK's top six waste disposal companies.

The pounds 116m bid is worth 175p a share, equal to 24.3 times Leigh's earnings in 1996-97.

The announcement of the deal was accompanied by a market raid on Leigh's shares, that easily mopped up 29.99 per cent of the equity. The takeover offer is 47 per cent more than the closing middle market price of Leigh's shares on 8 August, the last business day before the approach was made.

Leigh's chief executive, Shaun Bowden, said yesterday the takeover represented a good deal for employees and shareholders and gave them the benefits of the pounds 50m restructuring of the business two years ahead of schedule.

His own future has not been discussed but General Utilities' finance director, Joseph Mangion, emphasised the buyer planned to develop its waste management business to complement its other UK businesses, which include Connex, the operators of Southeast Trains.

Leigh's business, along with its rivals, has suffered from a combination of the long-term decline in the manufacturing industry, increasing competition in the UK market and problems with its chemical treatment technology. As long ago as 1991-92 it made a profit of pounds 14m on a turnover of pounds 119m. The business plunged into the red in 1995-96 recording a loss of pounds 9.6m as it struggled to cut costs and staff and eliminate loss-making activities.

The chemical and clinical waste divisions continued to lose money, but the group as a whole made a partial recovery last year and announced a profit of pounds 6.9m before exceptionals on a turnover of just pounds 115m in the year to 31 March 1997.

Leigh's business, which includes the collection and treatment of industrial waste in landfill sites in Essex, the Midlands and North-west, will be integrated with General Utilities' UK waste management businesses, which had a turnover of pounds 200m last year and specialised in the collection, recycling and disposal of municipal waste and specialist liquid waste.

General Utilities hopes to use Leigh to offer integrated packages to industrial and municipal customers. Leigh shares closed at 173p, up 21p.