Saint-Gobain makes final push to win over BPB's shareholders

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The Independent Online

Saint-Gobain, the French building materials group, is to raise its offer for the British plasterboard maker BPB by 5 per cent to between 750p and 760p a share, in a last-ditch attempt to persuade the board to recommend its bid.

The French company was urgently requesting a meeting with the BPB board yesterday to discuss its new proposal. If it cannot secure a board recommendation for an offer of about 760p, it intends to launch a final round of consultation with BPB shareholders over their likely support for a hostile bid at that level.

Under Takeover Panel rules, the French group has until Friday to secure a recommendation, elect to go hostile or withdraw from its approach, making this week the crunch time for a bid battle sparked by Saint-Gobain's initial approach in July.

BPB rejected the original offer of 720p, claiming it "fundamentally undervalued" the group. It has been briefing that nothing short of 800p will secure a recommendation.

At the start of last month, Saint-Gobain said it had received the backing of just 0.88 per cent of BPB shareholders. However, the company is confident of receiving the support of some hedge funds, which have taken short-term positions in the stock since the approach was made and which account for between 20 and 30 per cent of stock.

An offer of between 750p and 760p would see the majority of these short-term investors make a profit on their holdings. If the French company decides to pursue a hostile bid, it will require the support of at least 50.1 per cent of shareholders.

A spokesperson for Saint-Gobain would not comment on whether the group had raised its offer yesterday, but said: "What we've said all along is that Saint-Gobain did not want to go directly to the shareholders, and that is still the case."

The European Commission cleared Saint-Gobain's bid for BPB last week, restarting the Takeover Panel's clock and prompting Sir Ian Gibson, the chairman of BPB, to write to shareholders to try to persuade them against accepting any offer from the French group.

In the letter, Sir Ian said the valuation put on BPB was at a discount of 15 per cent to other recent takeovers in the sector, adding that the quality of BPB's business meant it should command an even higher bid than the sector average.

BPB has said if it remains independent, it will increase dividends by 88 per cent over the next three years and return capital equivalent to 120p per share immediately - a return of capital of £600m.

Richard Cousins, BPB's chief executive, is reputed to be confident that Saint-Gobain will fail to persuade shareholders to accept any offer much below 800p, although the company has been monitoring shareholder opinion going into the weekend. The board claims the fair value of the group is 832p a share, valuing the company at almost £4.2bn.

If successful in its approach, Saint-Gobain will create a company worth nearly £15bn and will become one of a string of foreign bidders to successfully acquire a UK blue-chip company this year.

Allied Domecq, O2, Exel, ScottishPower and P&O have received approaches from abroad this year. BPB reported an increase of 29 per cent in underlying first-half profits last week.

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