Charter recommends £1.5bn Colfax offer


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The Independent Online

Charter International has recommended a £1.5bn takeover offer from the American engineering group Colfax, although insiders at long-term suitor Melrose have not given up hope of securing a deal.

Charter's board yesterday recommended the cash and paper offer tabled by the US group, which was worth about 891p a share when the London market closed last night.

Lars Emilson, the chairman of Charter, called it an "attractive offer" adding that it reflected the strength of its business and the growth prospects. Its shares rose 7 per cent to 857p.

Colfax's chairman, Mitchell Rales, said it would prove a "transforma-tional acquisition" for the US group. "It accelerates our growth strategy, enhances our business profile and continues our journey to becoming a premier global enterprise."

Melrose, which first approached Charter with a 780p per share offer at the end of June, declined to comment yesterday.

Yet, one source close to Melrose said: "We do not think this is a done deal by any means." The source said some investors would be unhappy with the structure of the deal, of 730p in cash and 0.1241 new Colfax shares. Shares in the US engineer, whose largest investors are billionaire brothers Mitchell and Steven Rales tumbled more than 10 per cent on yesterday's news.

Melrose had increased its offer to 850p per share earlier this month, after news of a counterbidder emerged, which prompted Charter to open its books. Melrose had been under pressure from shareholders to engage with the turnaround specialist. It first approached Charter over the summer after a profit warning which triggered the resignation of chief executive Michael Foster.