M&G backs pounds 196m bid for Newman
Wednesday 18 December 1996
In a highly unusual move M&G, Newman Tonks' biggest shareholder with an 11.2 per cent stake, said it had irrevocably undertaken to accept FKI's offer while Britannic Assurance, another institutional investor, also pledged its 2.2 per cent stake to FKI.
M&G normally backs incumbent management in takeover situations, but the fund manager has become disillusioned with Newman Tonks' poor track record.
"In no way could it be described as a successful company. It has demonstrably underperformed," said Nigel Morrison, a director of M&G. "We have been invested in Newman Tonks for many years and supported them through rights issues and a bid by McKechnie in the late Eighties. But their share price [prior to the bid] and the dividend are lower than 10 years ago. FKI's bid is the quickest way of realising shareholder value."
However, Mr Morrison denied M&G had changed its policy on takeovers. "This is a one-off situation," he said.
Newman Tonks, a Birmingham-based maker of door handles, locks and hinges, rejected what it called FKI's "opportunistic" bid and urged shareholders to take no action. It said the bid did not reflect the value of its brands, market position or future prospects.
FKI is offering a mixture of cash and shares worth 150p, or pounds 196m. There is a 140p cash alternative. The deal is being funded by a fully underwritten conditional rights issue of two new FKI shares for every 13 existing shares held at 175p to raise pounds 152m.
The rest of the deal will be funded from internal resources, taking FKI's gearing up from more than 60 per cent to 80 per cent. Jeff Whalley, FKI's chairman, said the combination of Newman Tonks with FKI's hardware group would create a business with an annual turnover of pounds 500m, making it the largest of FKI's four divisions with 38 per cent of sales.
FKI first approached M&G a fortnight ago. Talks between Mr Whalley and Newman Tonks' chairman, Christopher Hughes, about an agreed 134p- a-share cash offer worth pounds 172m began on Thursday at the London offices of ING Barings, the merchant bank brought in to handle the deal ahead of FKI's normal advisers, Rothschilds.
But discussions broke down on Sunday when Newman Tonks revealed it had been approached by FKI but did not disclose a bid value.
Last night shares in Newman Tonks ended 20.5p firmer at 149.5p. FKI fell 3.5p to 196.5p.
Comment, page 15
- 1 The black and blue dress: Makers considering a white and gold version
- 2 Husband and wife die holding hands within hours of each other after 67 years of marriage
- 3 PornHub turns masturbation into energy in bid to save the planet
- 4 The remarkable archaeological underwater discovery that could open up a new chapter in the study of European and British prehistory
- 5 Saudi Muslim cleric claims the Earth is 'stationary' and the sun rotates around it
Boris Nemtsov shot dead: Putin critic may have been murdered by Islamic extremists, says president-led committee
Stephen Hawking's wife Jane Wilde on their marriage breakdown: 'The family were left behind'
British are sexually uptight, dirty and drink too much – according to Spanish book
PornHub turns masturbation into energy in bid to save the planet
White and gold or blue and black – what colour is the dress? An eyewitness gives a definitive answer
New theory could prove how life began and disprove God
This is what it's like to be dead, according to a guy who died for a bit
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Ukip would cut billions from Scottish budget to fund English tax cuts
Russia's roadmap for annexing eastern Ukraine 'leaked from Vladimir Putin's office'
iJobs Money & Business
£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...
£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...
£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...
£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...