UTC raises its offer for Kidde and gets closer to £1.4bn deal

Kidde moved a step closer yesterday to being bought by America's United Technologies, which increased its offer for the UK fire extinguisher maker to £1.39bn.

Kidde moved a step closer yesterday to being bought by America's United Technologies, which increased its offer for the UK fire extinguisher maker to £1.39bn.

UTC said it would pay 165p a share, up 5p from its previous offer, sending Kidde's shares up 7p to 161p. The market expects the British engineering group to allow the Connecticut-based UTC access to its books, clearing the way for a possible deal.

If UTC triumphs in its pursuit of Kidde, it would reunite some of the former Williams Group conglomerate, which also used to include Chubb, the security group bought by UTC last year.

Kidde rejected a 160p bid on 22 October from UTC, whose businesses include Pratt & Whitney jet engines, Sikorsky helicopters and Otis lifts. Under Takeover Panel rules, UTC has until 16 December to table a better offer or be forced to withdraw for six months.

Investors in Kidde, which provides fire and safety equipment to the aerospace, residential and commercial sectors, saw yesterday's move as a step in the right direction. But analysts believe they will be unwilling to sell for 165p a share, which values the business at one-third more than it was trading at in mid-October, when UTC's interest first emerged.

However, the hope of Kidde's management that the company would sell for at least 180p a share is seen by some shareholders as unrealistic. The Slough-based company said: "Consistent with its previously stated willingness to share information with UTC in order to enable it to recognise the value of Kidde, the board of Kidde intends to grant UTC limited due diligence access."

UTC will have to sign a confidentiality agreement in order to see Kidde's books. The UK company hopes that when it reveals its current trading record, UTC will raise its offer further.

Investors had feared UTC would walk away after the panel intervened to prevent a stalemate dragging on into next year. Both sides now hope to reach an agreement before the Takeover Panel's deadline of next Thursday.

The US conglomerate owns a 2.6 per cent stake in Kidde and has received prior approval from competition regulators to acquire up to 30 per cent.

Kidde said earlier this year its annual profits rose 26.5 per cent to £86.5m during 2003.

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