Longwall lifeline for besieged pit group

Coal resurgence could save Dobson Park from US bid

THE renaissance of the coal industry is emerging as a critical factor in mining equipment group Dobson Park's defence against US bidder Harnischfeger.

Dobson Park says it has recently begun to receive orders for longwall mining equipment from RJB Mining, the group headed by entrepreneur Richard Budge, which acquired the bulk of British Coal's mines last year in an pounds 810m deal. In September, RJB disclosed half-year profits of pounds 86m, up from pounds 6.8m in the same period the previous year.

RJB may now offer a crucial boost to Dobson Park, which suffered badly as British Coal lost the funding to invest and world coal markets became increasingly competitive.

Dobson had already managed to replace many lost domestic orders with exports, but the return of British orders could be the icing on the cake for the once hard-pressed business. RJB directors were unavailable for comment yesterday, but a spokesman said it was "looking to improve production".

RJB's debt has fallen substantially, allowing it the flexibility to further invest in increasing production efficiency. Although the privatised venture has got off to a flying start, intense pressure remains for it to further improve margins and efficiency, as key contracts with the British electricity generators come up for renewal in 1998.

This Friday, Dobson Park's US assailant must say if its 110p a share offer, worth pounds 172m, is final, or whether it will increase it.

Dobson Park's shares closed up 1p at 125p after the group issued its final defence on Friday.

The City consensus is that a higher offer is in the wings. That expectation is supported by analysts following the battle, who see fair value for the group at 140p and over. Analyst Colin Fell, of Kleinwort Benson, believes a realistic offer must be pitched at between 140p and 150p, if shareholders are to be tempted to relinquish control.

Dobson Park said orders were running substantially ahead of the same time last year, while it forecast profits would reach pounds 14.8m for the year to September 1995 - an increase of 41 per cent. A 4.5p dividend reflects a rise of 20 per cent. Operating margins at key mining subsidiary, Longwall, are expected to hit 6.7 per cent by December, an improvement of 34 per cent.

John Hanson, Harnischfeger's chief executive, said: "We have set a cap to what we see as the ultimate value of the business. This document gives us no reason to alter that."

There were signs of trouble at Dobson Park's toys division and its industrial electronics controls arm, he said. The focus of the battle, however, is over the prospects for Longwall International, which supplies roof supports, conveyor belts and shearers for longwall mining.

The attractions to Harnischfeger of the deal are clear. A worldwide consolidation has seen two groups emerge as industry leaders - Dobson Park in the UK and DBT in Germany. Harnischfeger's mining equipment business depends on sales of equipment to the traditional "room and pillar" (R&M) means of extraction.

While the longwall method shears off successive faces of coal, enabling maximum extraction, R&M - a declining market, Dobson says - criss-crosses the seam, leaving pillars of coal behind to support the roof.

A combination, then, would substantially enhance Harnischfeger's attractions to equipment purchasers both in the US and internationally.

For that reason, Kleinwort's Colin Fell says, the bid is a defensive move by the Americans. "They need Longwall to protect their own business," he said.

Start your day with The Independent, sign up for daily news emails
sportWWE latest including Sting vs Triple H, Brock Lesnar vs Roman Reigns and The Undertaker vs Bray Wyatt
Arts and Entertainment
Louis Theroux: By Reason of Insanity takes him behind the bars again
tvBy Reason of Insanity, TV review
Arts and Entertainment
Cassetteboy's latest video is called Emperor's New Clothes rap
videoThe political parody genius duo strike again with new video
Arts and Entertainment
tvPoldark, TV review
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Ashdown Group: Learning and Development Programme Manager

£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor
How to make your own Easter egg: Willie Harcourt-Cooze shares his chocolate recipes

How to make your own Easter egg

Willie Harcourt-Cooze talks about his love affair with 'cacao' - and creates an Easter egg especially for The Independent on Sunday
Bill Granger recipes: Our chef declares barbecue season open with his twist on a tradtional Easter Sunday lamb lunch

Bill Granger's twist on Easter Sunday lunch

Next weekend, our chef plans to return to his Aussie roots by firing up the barbecue
Joe Marler: 'It's the way I think the game should be played'

Joe Marler: 'It's the way I think the game should be played'

The England prop relives the highs and lows of last Saturday's remarkable afternoon of Six Nations rugby
Cricket World Cup 2015: Has the success of the tournament spelt the end for Test matches?

Cricket World Cup 2015

Has the success of the tournament spelt the end for Test matches?
The Last Word: Justin Gatlin knows the price of everything, the value of nothing

Michael Calvin's Last Word

Justin Gatlin knows the price of everything, the value of nothing