Pilkington, the glass maker that has been part of UK corporate life since 1826, finally succumbed to a £2.2bn takeover bid from Japan yesterday.
Nippon Sheet Glass is paying £1.8bn for the 80 per cent of the shares it didn't already own, an offer the board found impossible to turn down. Pilkington, led by Stuart Chambers, its chief executive, and Sir Nigel Rudd, its chairman, had refused three previous offers from NSG.
Sir Nigel, chairman for more than 10 years, will step down, taking away about £4m in the process. He was always paid entirely in shares. Mr Chambers will receive about £2.5m. He will join the NSG board.
Mr Chambers became chief executive in 2002, impressing the City with a swift turnaround of the business. Pilkington announced a 22 per cent jump in first-half profits to £99m in November last year.
He admitted yesterday that approving the latest offer from NSG was an easy decision: "It didn't take long. At 165p, that takes us to the other side of a line for shareholders. We believe we could get there with our strategy, but that carries a risk."
Asked about resistance to the idea of a British institution selling out to foreigners, he replied: "I think this is a very happy day for UK manufacturers. This is a Japanese company paying a full price for a UK company.
"I think that is very positive. I don't think most people in the factories care which set of investors owns us."
Pilkington employs 24,000 people, of which 4,500 are in the UK (down from 60,000 in 1960). Job cuts are not expected.
Nippon has coveted Pilkington for some time, believing that a takeover offers its best chance to take on Asahi Glass, the world's number one player. NSG believes its close ties to Toyota and Honda will help it secure more business from the car sector, Pilkington's biggest market.
NSG faced tough questions from some of its investors yesterday. Mitsuyoshi Akino, a Japanese fund manager, said simply: "The price is too high."
At 165p a share, the deal is 16 times future earnings. NSG is financing the deal through hefty borrowing, hurting the strength of the balance sheet and possibly the share price. The offer will now go to Pilkington shareholders, who must vote in favour by a 75 per cent majority.
Deutsche Bank's Paul Roger wrote in a note to clients: "This is a great deal for shareholders and also makes strategic sense from a NSG perspective. We expect it to succeed, especially given the lack of a counterbidder and low regulatory risk."
Pilkington shares closed up 2.75p at 161.25p.Reuse content