pounds 372m US buy cuts Tomkins' cash pile
Thursday 10 April 1997
Greg Hutchings, executive chairman of Tomkins, said: "Stant is an excellent acquisition for Tomkins and will complement Gates. Stant expands our product offering to the automotive equipment market and increases the range and volume of products we can distribute through Gates."
He hit back at recent calls for Tomkins to return its mounting cash pile to shareholders: "Cash availability has enabled this transaction to take place and demonstrates the effectiveness of our strategy of maintaining cash as a strategic asset in readiness for suitable acquisition opportunities."
Tomkins paid $21.50 a share for Stant's Nasdaq-traded shares, a 29 per cent premium to Tuesday's close of $16.625. The bid valued Stant's equity at pounds 249m and Tomkins is assuming a further pounds 123m of debt.
Stant employs more than 7,000 people in 20 manufacturing sites located in the US, Mexico, the UK and Australia. It is one of the world's leading manufacturers of car windscreen wipers, wiper blades, closure caps and engine thermostats. It also makes hose clamps, heaters, grease guns and tools.
Responding to worries that Tomkins was biting off another sizeable deal only months after the Gates deal was completed, Mr Hutchings said: "We have owned Gates for some considerable time now and we feel it is running reasonably well. We see it as a very exciting opportunity to merge the company with Gates."
He added that there was considerable scope to increase Stant's current margin of 9.4 per cent, although he stopped short of giving details on how high the return on sales could go or how long the improvement would take.
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