Blackstone in talks over renewed bid for FKI

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The Independent Online

Blackstone, the US private equity group, is considering launching a fresh bid for the engineering group FKI, having previously held talks about acquiring the firm.

FKI is understood to have invited Blackstone in for talks following the indicative offer it received from the engineering conglomerate Melrose last Friday.

Melrose told FKI it was willing to pay 70p a share for FKI, a premium of 10 per cent or so on its price in the market, but significantly below the 130p that Blackstone considered paying last August, before pulling back as the global credit crunch began to hit the private equity sector.

At a meeting between the two companies yesterday, Blackstone is thought to have reiterated its interest in FKI, though for now it is considering its options. The private equity group is understood to be considering a bid of 90p to 95p, significantly more than Melrose.

FKI shares have been falling in value since the company issued a profits warning last autumn. However, in a trading update earlier this week, the company said it expected strong growth during 2008.

In particular, FKI's energy technology business has posted record growth in its order book, while its lifting products division is also performing especially well.

On the other hand, the company has been held back by the correction in the US housing market, which has hit its hardware unit. It is also still keen to sell Logistex, which services baggage handling systems at airports, but has found it difficult to do so during the global credit crunch.

Analysts have been broadly supportive of a tie-up between Melrose and FKI, but the firm is thought to be keen to secure an improved offer. A new bid from Blackstone could spark a bidding war.

Shares in FKI were flat yesterday, shedding 0.75p to close at 64.75p. Both FKI and Blackstone said they would not comment.

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