American rivals in £250m bid battle for UK's First Technology

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The Independent Online

Shares in First Technology soared 27 per cent to 351p - 21p above Danaher's 330p offer price - as dealers bet on Honeywell returning with a higher bid.

Honeywell, which ignited the takeover tussle last month by making a recommended offer for First Technology worth 275p a share and buying up 4 per cent of the company, refused to comment last night. But the company is understood to be reviewing its options. "They want this business and they are running the numbers but they aren't prepared to overpay," one source said.

In an attempt to deter a higher bid, Danaher went into the market yesterday and bought 8 per cent of First Technology at 330p a share. Aberforth Partners, which owns 10 per cent of the company, has also given an irrevocable undertaking to back the offer, taking Danaher's stake to 18 per cent. In addition, Morley Fund Management has given irrevocable undertakings to sell its 10 per cent holding to Danaher unless Honeywell comes back with a higher offer within seven days.

"We've got 18 per cent of the company and a superior recommendation from the management, they've got 4 per cent, so we're in the box seat," one adviser to Danaher said.

First Technology also specialises in other automotive safety devices and hand-held gas detection monitors, and has worked in partnership with Danaher for seven years. Fred Westlake, First Technology's chairman, said in addition to the substantial premium being paid by Danaher, its bid offered "a superior strategic fit". He said First would benefit from collaboration on development of gas detection devices and Danaher's geographic reach and spread of customers.

Morley's intention to back the Danaher offer with its 10 per cent stake gives Honeywell until next Friday, in effect, to decide whether it wants to remain in the auction. If Honeywell bows out, First Technology will be liable to pay a £2m break fee. There is a £2.5m break-fee clause in the agreement with Danaher.

The bid battle makes First Technology the latest in a series of British companies to be fought over by foreign rivals, although the bulk of its manufacturing operations are in the US and its chief executive Jeff Wood and finance director Oliver Burns are American.