M&G backs pounds 196m bid for Newman

FKI, the acquisitive engineering group, yesterday launched its first hostile takeover by delivering a potentially knock-out bid worth pounds 196m for Newman Tonks, Europe's largest architectural hardware company.

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

PROMOTED VIDEO
Arts and Entertainment
Standing the test of time: Michael J Fox and Christopher Lloyd in 'Back to the Future'
filmReview: A week late, Secret Cinema arrives as interactive screening goes Back to the Future
Travel
travel
Arts and Entertainment
Sydney and Melbourne are locked in a row over giant milk crates
artCultural relations between Sydney and Melbourne soured by row over milk crate art instillation
Arts and Entertainment
Adèle Exarchopoulos and Léa Seydoux play teeneage lovers in the French erotic drama 'Blue Is The Warmest Colour' - The survey found four times as many women admitting to same-sex experiences than 20 years ago
filmBlue Is The Warmest Colour, Bojack Horseman and Hobbit on the way
Arts and Entertainment
Preparations begin for Edinburgh Festival 2014
Edinburgh festivalAll the best shows to see at Edinburgh this year
News
Two giraffes pictured on Garsfontein Road, Centurion, South Africa.
i100
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
Kenny Ireland, pictured in 2010.
peopleBenidorm, actor was just 68
Environment
View from the Llanberis Track to the mountain lake Llyn
Du’r Arddu
environmentA large chunk of Mount Snowdon, in north Wales, is up for sale
News
i100
Arts and Entertainment
arts + ents
News
Morrissey pictured in 2013
people
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Regulatory Reporting-MI-Bank-Cardiff-£300/day

£200 - £500 per day + competitive: Orgtel: I am currently working on a large p...

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Training Programme Manager (Learning and Development)-London

£28000 - £32000 per annum + benefits: Ashdown Group: Training Programme Manage...

1st Line Support Technician / Application Support

£20000 - £24000 per annum: Harrington Starr: A leading provider of web based m...

Day In a Page

Dress the Gaza situation up all you like, but the truth hurts

Robert Fisk on Gaza conflict

Dress the situation up all you like, but the truth hurts
Save the tiger: Tiger, tiger burning less brightly as numbers plummet

Tiger, tiger burning less brightly

When William Blake wrote his famous poem there were probably more than 100,000 tigers in the wild. These days they probably number around 3,200
5 News's Andy Bell retraces his grandfather's steps on the First World War battlefields

In grandfather's footsteps

5 News's political editor Andy Bell only knows his grandfather from the compelling diary he kept during WWI. But when he returned to the killing fields where Edwin Vaughan suffered so much, his ancestor came to life
Lifestyle guru Martha Stewart reveals she has flying robot ... to take photos of her farm

Martha Stewart has flying robot

The lifestyle guru used the drone to get a bird's eye view her 153-acre farm in Bedford, New York
Former Labour minister Meg Hillier has demanded 'pootling lanes' for women cyclists

Do women cyclists need 'pootling lanes'?

Simon Usborne (who's more of a hurtler) explains why winning the space race is key to happy riding
A tale of two presidents: George W Bush downs his paintbrush to pen father’s life story

A tale of two presidents

George W Bush downs his paintbrush to pen father’s life story
Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover

The dining car makes a comeback

Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover
Gallery rage: How are institutions tackling the discomfort of overcrowding this summer?

Gallery rage

How are institutions tackling the discomfort of overcrowding this summer?
Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players

Eye on the prize

Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players
Women's rugby: Tamara Taylor adds fuel to the ire in quest to land World Cup

Women's rugby

Tamara Taylor adds fuel to the ire in quest to land World Cup
Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

The day America’s love of backyard tigers led to a horrific bloodbath

With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

How Samuel Beckett became a French Resistance spy

As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
We will remember them: relatives still honour those who fought in the Great War

We will remember them

Relatives still honour those who fought in the Great War
Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

Kodak's last-ditch bid to keep celluloid alive

Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

Acting in video games gets a makeover

David Crookes meets two of the genre's most popular voices