Charter agrees to £471m takeover by Lincoln

Charter, the engineering company, yesterday agreed to a £471m cash offer from America's Lincoln Electric Holdings, to create the world's biggest welding equipment group.

The UK company, which dates back to 1889 when it was founded as the British South Africa Company by Cecil Rhodes, said that its depressed share price had prompted it to endorse the 500p-a-share offer. The company existed mainly as a mining finance business until the 1980s, when it branched into engineering.

Nigel Smith, Charter's chief executive, said: "Our prospects have improved but our share price has remained stubbornly low. This deal is a personal disappointment, as it has happened because the stock market undervalued us, but the price achieved gives me professional satisfaction."

The offer is at a 105 per cent premium to Charter's closing share price of 243.5p on Tuesday. Five years ago, its shares traded above 900p.

David Larkam, an analyst at Albert E Sharp Securities, said: "Shareholders will be relieved to get out at £5."

However, he said the price did not look as generous when measured as a multiple of earnings. The offer, which comes with irrevocable undertakings representing 31 per cent of Charter's share capital, is worth 12.5 times City earnings forecast for the current year.

Mr Larkam said that the major question mark over the deal was regulatory clearance and how long that might take. He said that would be one reason why investors sold shares for less than 500p yesterday - 23.5 million changed hands, with a closing price of 467.5p.

"The big issue now is whether it will go through, not whether someone else will come in," he said.

The move would double Lincoln's share of the world welding products market to 20 per cent. US regulators can put takeovers in doubt because of the length of time taken to resolve competition issues.

Jim Schilling, vice-president of corporate development at Lincoln, said he did not believe that the combined group would be forced to make substantial disposals to satisfy regulators.

He also said that Lincoln had not yet decided whether it would retain or sell Howden, Charter's industrial fans division and its only remaining substantial interest outside welding. It sold its specialist engineering division last year.

"We were interested in the welding business - we're a welding company. But we have identified real value in Howden. We need to decided whether to make this a second core business for us."

Mr Schilling said that the rationale of the deal was to expand Lincoln's geographical reach. Charter is strong in Europe. Lincoln's main facilities are in the US, Canada and Mexico.

Start your day with The Independent, sign up for daily news emails
Voices
voices
News
general electionThis quiz matches undecided voters with the best party for them
Arts and Entertainment
Keira Knightley and Matthew Macfadyen starred in the big screen adaptation of Austen's novel in 2005
tvStar says studios are forcing actors to get buff for period roles
News
Prince William and his wife Catherine, Duchess of Cambridge show their newly-born daughter, their second child, to the media outside the Lindo Wing at St Mary's Hospital in central London, on 2 May 2015.
news
ebooks
ebooksA celebration of British elections
  • Get to the point
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

Ashdown Group: Trainee Consultant - Surrey/ South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before