Charter continues to resist Melrose buyout

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Takeover target Charter International stepped up efforts to resist an approach from manufacturing buyout firm Melrose yesterday, setting new growth targets and reporting an increase in first-half profits.

The group, which rejected a £1.4 billion approach from Melrose earlier in July, said pre-tax profits rose by 3.1 per cent to £75.6m, as a strong performance from its Howden air and gas handling equipment division offset weakness in its ESAB welding tools business.

Charter issued a profit warning in June – saying its full-year results would be below expectations because of continued weakness in the ESAB business, which has been plagued by higher steel prices. The group appointed a new chief executive, Gareth Rhys Williams, earlier in July, who is tasked with turning around performance and examining strategic options.

Mr Rhys Williams performed a similar turnaround at Candover's equipment manufacturer Capital Safety and had a seven-year stint as chief executive of broadcast equipment maker Vitec.

"Charter is battling to retain independence but on balance we felt that this will not be achieved. Gareth Rhys Williams did a good job at Vitec but has a difficult task in persuading shareholders that he can turn things round in a short space of time," Jon Lienard, an analyst at Brewin Dolphin, said.

Charter shares closed at 798p, below Melrose's latest approach at 840p per share, which the Charter board rejected.