Fiberweb shares hit as takeover deal collapses

Shares in Fiberweb tumbled yesterday as a takeover deal being discussed by the fabric supplier collapsed. The shares fell 17.5p to 37.5p, wiping £21m off the value of the company.

Fiberweb had been in discussions with Israel's Avgol Industries, which makes fabrics used in nappies and hospital uniforms.

But yesterday the Israeli company admitted defeat in its pursuit of its British rival after it was unable to secure financing because of the ongoing effects of the credit crunch.

In a statement to the Tel Aviv stock exchange, Avgol said: "Due to the global credit crisis and the difficulties raising the capital required to acquire Fiberweb under conditions that we view as reasonable, the company has decided not to make an offer."

Avgol had been seeking around $400m from Israeli institutional investors and non-Israeli banks, along with a further $200m of mezzanine finance to help pay for the planned acquisition.

It had intended to use some of the cash raised to refinance Fiberweb's borrowings but when the plans were announced this month, the Israeli company admitted that the financing terms had not been finalised and the discussions subsequently floundered.

Fiberweb said it was "confident of the prospects of the group as an independent business" after the collapse of the talks.