Honeywell trumps rival with £290m bid for First Technology

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The Independent Online

Honeywell International raised the stakes in the bid battle for the crash test dummies group First Technology last night, trumping its US rival Danaher with a £290m cash offer.

The 385p-a-share bid is 40 per cent higher than the 275p-a-share offer the US industrial conglomerate first tabled in December, and beats the 330p offer from Danaher that First Technology's board recommended last week.

Honeywell's chairman and chief executive officer David Cote said the higher bid was justified "in light of the strong fit and realizable cost synergies" with the conglomerate's Life Safety group, which produces commercial fire and smoke alarms. The group will also assume £112m of First Technology's debt.

One equity analyst who follows the company told Reuters last night that the higher price could be justified as First Technology could prove a smooth fit with existing Honeywell operations. "But Honeywell can claim significant synergies with their Zellweger Analytics division," the analyst added.

Honeywell claimed the backing of more than 29 per cent of First Technology's shareholders last night, including the UK group's directors and the fund manager Morley, and said that it would seek a recommendation from the board.

The UK group, as well as being the third-largest maker of crash test dummies in the world, specialises in hand-held gas detection monitors and automotive safety devices. It has had a partnership with Danaher, an industrial tools group based in Washington, for seven years.

Honeywell said it believed it would be able to close the deal in the first half of the year and that it expected the acquisition to have no effect on its 2006 earnings guidance. It said the deal would be accretive to 2007 earnings. The conglomerate has been building up its security equipment business of late. In March 2005 it acquired Novar, a UK maker of fire detectors and other security products.

Danaher was unavailable for comment last night. However, the US group has bought 9 per cent stake in First Techonology outright at its offer price and has options to acquire at least 10 per cent more. This could yield Danaher a profit of £12m if it sells these shares to Honeywell's offer.

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