Novar chief pockets £810,000 bonus in US takeover deal

The chief executive of Novar, the building supplies, fire protection and cheque printing group, is to walk away with an £810,000 bonus for five weeks' work after the company accepted a £798m break-up bid yesterday from Honeywell of the US.

Stephen Howard, who took the helm on 4 November, is entitled to a success fee equivalent to 1.25 times his £650,000 salary for pulling off the deal which trumps an earlier hostile bid from Melrose.

Analysts said the 185p-a-share offer was likely to prove a knockout price. Together with a 6.6p final dividend which Honeywell will pay Novar shareholders and the cost of taking on its £300m in debt and buying out preference shareholders, the deal is valued at £1.2bn.

Melrose, a buyout vehicle put together with the backing of a number of big institutional shareholders and led by a former Hanson executive, had bid 173p in a mixture of cash and shares. After the Novar board's decision to recommend the Honeywell offer, Melrose said it was reviewing its options. But an increased bid is thought unlikely unless its institutional backers show appetite to provide more funding.

Honeywell said it intended to keep only Novar's fire alarms, lighting systems and CCTV division and dispose of the other two, which specialise in aluminium extrusions and cheque printing. The US company said it expected the sale of these two divisions to raise $1bn (£520m) to $1.5bn.

Mr Howard defended the bonus he is set to collect on the grounds that the value of the company had increased by £300m since his appointment. Mr Howard was made chief executive on the same day that Melrose announced its intention to bid. Honeywell's offer represents a 49 per cent premium to the Novar share price the previous day.

He said Novar had already been looking at strategic options for the group, including a break-up, when Melrose declared its bid intentions. "We were going to move ahead regardless of what Melrose did," Mr Howard added.

Novar's biggest shareholder, Active Value, has given irrevocable undertakings to accept the Honeywell offer unless a competing bid worth at least 10 per cent more is made. There is a £6m break fee if Novar sells out to another bidder.

David Anderson, Honeywell's finance director, said there would be job losses as a result of combining Novar's remaining business with its own automation and control systems division but he declined to say how many.

Mr Anderson estimated that the deal would generate $100m of additional profits a year and said he did not expect any regulatory opposition because the products and markets that the two companies operated in were largely complementary.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

Day In a Page

The long walk west: they fled war in Syria, only to get held up in Hungary – now hundreds of refugees have set off on foot for Austria

They fled war in Syria...

...only to get stuck and sidetracked in Hungary
From The Prisoner to Mad Men, elaborate title sequences are one of the keys to a great TV series

Title sequences: From The Prisoner to Mad Men

Elaborate title sequences are one of the keys to a great TV series. But why does the art form have such a chequered history?
Giorgio Armani Beauty's fabric-inspired foundations: Get back to basics this autumn

Giorgio Armani Beauty's foundations

Sumptuous fabrics meet luscious cosmetics for this elegant look
From stowaways to Operation Stack: Life in a transcontinental lorry cab

Life from the inside of a trucker's cab

From stowaways to Operation Stack, it's a challenging time to be a trucker heading to and from the Continent
Kelis interview: The songwriter and sauce-maker on cooking for Pharrell and crying over potatoes

Kelis interview

The singer and sauce-maker on cooking for Pharrell
Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea