Charter shares halve as US offer collapses

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Charter, the British engineering group, yesterday halved in value when its American suitor Lincoln Electric Holdings confirmed it had withdrawn its takeover offer but declined to say why.

Charter, the British engineering group, yesterday halved in value when its American suitor Lincoln Electric Holdings confirmed it had withdrawn its takeover offer but declined to say why.

The shares slumped 53 per cent to close at 160p, after the announcement of the lapsed bid was compounded by a profit warning from Charter. The shares had already fallen 41p on Friday ahead of Lincoln's announcement of its lapsed bid.

Yesterday Charter, which believes the lapse was related to the level of acceptances, said it had discussed the matter with Lincoln and would reserve the right to seek legal redress.

Lincoln stayed tight-lipped,simply saying Charter was "made fully aware of its reasons" for lapsing the offer. It said shareholders representing 48 per cent of Charter had accepted the bid.

The Ohio-based welding equipment maker first made an offer for Charter in April but reduced it from 500p to 410p a share last month, following regulatory demands by the US Federal Trade Commission about disposals of parts of Charter's business. Charter, which under its core businesses Esab and Howden makes welding and cutting, recommended the revised bid to shareholders. The offer valued the group at £386m and represented a 68 per cent premium on its share price prior to the first bid. Its value at last night's close was just £150m.

Charter issued a statement saying: "The long period of uncertainty associated with the bid has increasingly affected financial performance during the year. It is expected that the second half operating profits for the continuing businesses will be significantly below those reported in the second half of 1999."

Yesterday analysts said Charter's trading performance, coupled with regulatory demands, had combined finally to deter Lincoln from the deal. In the six months to 30 June, Charter reported operating profit of £25.5m, down from £29.7m in 1999. "Lincoln has probably decided it can't make the deal work at any price," said one equity analyst.

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