Troubled Chubb agrees £622m UTC takeover

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The Independent Online

Chubb has agreed a £622m takeover by the US conglomerate United Technologies Corp, the maker of Pratt & Whitney aircraft engines and Sikorsky helicopters.

The UTC board met last night to finally agree the terms of the deal. The Chubb board, which admitted it was in takeover talks on 16 April, met and accepted the offer on Tuesday.

The bid is worth 75p a share or £622m, plus 1p a share interim dividend which will be paid to Chubb shareholders.

That represents a premium of some 22 per cent on the level that Chubb shares were trading before it revealed the bid approach. The company's shares closed up 5 per cent to 72.75p yesterday. Chubb supplies electronic security and fire prevention systems as well as security guards and monitoring devices. It has one of the best known brands in the business.

Chubb is the world's third-largest security group. UTC already owns Carrier air conditioners and Otis elevators, which require it to send workers to other companies' offices for installation and maintenance. With the 200-year-old Chubb, it will also be able to offer security services.

UTC is catching Chubb at a low point, after the British company has been hit by difficult markets. In a profits warning in April, Chubb cited poor trading conditions in Asia and in its US hotel locks business and added: "Chubb believes that results for the full year will fall significantly short of its expectations."

Analysts have said a deal at 75p would be disappointing, but Chubb put out the profits warning after announcing the bid talks, thereby damaging its bargaining position. Since Chubb's earnings alert, a number of its competitors, including Securicor and Securitas, have also sounded the alert on the state of the market.

One shareholder said: "Chubb has got a great brand and it has just hit bad times. We'd be reluctant to sell it out too cheaply and give the upside to someone else."

Chubb sold its famous lock and safe-making units in 2000 - the brand has been associated with locks since Charles and Jeremiah Chubb patented their secure lock mechanism in 1818. Chubb investors have had a rocky ride since the company's demerger from the Williams conglomerate in 2000.

Last year, rival security firm Securitas of Sweden held bid talks, only to pull out when a steep rise in Chubb's shares increased the price tag.