Shareholders endorse Farnell bid for Premier

TOM STEVENSON

and JOHN LELEAN

Farnell sailed through yesterday's crucial vote on its pounds 1.85bn bid to buy the US distribution giant Premier, with a decisive majority of shareholders voting for the ambitious acquisition.

Just under 84 per cent of the votes cast were in favour of the deal, comfortably in excess of the 75 per cent support the company needed. More than three-quarters of Farnell's shareholders either voted in person or sent in proxy votes, a high turnout even for a contentious vote.

Richard Hanwell, chairman of Farnell, said: "I am delighted that shareholders have approved this transaction, which the board unanimously believes to be in the best interests of the company. My message to customers and to our shareholders is that Farnell will continue to deliver the goods."

The failure of an attempt by leading institutions including Standard Life and Legal & General to shoot down the deal gives the company the green light to progress with its global ambitions and avoids an embarrassing climb-down by Farnell's management for which the ballot on the deal had become a vote of confidence.

In recent weeks the deal has become something of a corporate governance cause celebre, with a small but influential group of shareholders determined to scupper what they saw as an overpriced and risky acquisition. Other institutions, including large shareholders such as the Prudential and Norwich Union, kept their own counsel but are thought likely to have also voted against the deal.

Graham Wood, head of UK equities at Standard Life, said he was disappointed by the decision. He added: "I'm pleased there has been a full debate. However, we will need to have a think regarding the future of our 2 per cent stake in Farnell."

Standard Life raised eyebrows in the City when it pledged to vote against the deal a week before the vote took place. The unusual statement of intent was seen as a deliberate attempt to drum up support for a no vote.

Standard Life was also criticised for taking part in the underwriting of a rights issue, which the company was using to part-fund the deal, when it disapproved of the use to which the proceeds were to be put. Mr Wood defended that decision, saying the fund's corporate and investing activities were separate and claiming to have been honest with the company regarding its proposed no vote.

A number of former employee shareholders agreed that the price of $34 a share was too high to pay for a company whose stock stood at $24 before the bid was announced. Heated questions from the floor meant the 11 o'clock meeting dragged on until lunchtime and the results of the poll were not announced until almost 3 o'clock.

The former main board director Eric Hall, who had conducted a spirited campaign against the deal, asked why Premier had not made a bid for Farnell and offered the shareholders pounds 10 each for their shares.

Howard Poulson, chief executive, said after the vote that he expected the renamed Premier Farnell to be running smoothly within about 12 months of the merger.

He added: "The management teams are very similar and in about one year we will feel comfortable."