APV's shares, which were 66p before it first revealed an approach at the end of April, soared 17p to 106.5p yesterday, just above the Siebe bid terms. Siebe is offering 0.10955 of its own shares for every one in APV, valuing the latter at just above 106p after the Siebe price rose 11.5p to 970p yesterday. Siebe is shaving around pounds 3.5m off its bid costs by underwriting 46 per cent of 97.5p cash alternative from its own resources.
APV announced it had received a second "indication of interest" just two days after Siebe's approach and analysts were yesterday keeping an open mind as to whether a rival would make a counter offer. GEA, a German food processing machinery company which announces its results on Monday, refused to rule itself out of the running, although European competition concerns may prove a constraint. Speculation was also rife yesterday about the intentions of FMC, a big US food conglomerate.
Paul Compton of brokers Merrill Lynch suggested there was still a slim chance of a rival offer. "It might not be all over, but I think it probably is", he said.
There was a general welcome from analysts for the Siebe deal, which comes 11 years after it mounted an earlier takeover attempt on APV. Describing it as a "clip on acquisition" which would be integrated with the Foxboro control systems business, Allen Yurko, Siebe's chief executive, said it offered "clear, no nonsense, up-front synergy benefits" which will enhance earnings and enhance shareholder value "right out of the blocks". He said APV's original plan to shed 500 jobs might possibly be increased to as many as 1,000, with most of the losses coming outside the UK and administrative functions. APV's chief executive, Neil French, is being kept on for at least the transition period, but he could be in line for a payoff of around pounds 600,000 if he goes.
APV has been struggling for years and Siebe is now aiming to raise last year's 3.5 per cent margins to 10 per cent over the next two to three years, implying around pounds 50m of cost savings are in prospect. But Mr Yurko said the main benefits would come from cross selling Siebe's Intelligent Automation process control system, which is now close to overtaking Honeywell as the market leader in this sector, through APV's 1,000 strong sales force operating in 40 countries. Foxboro already has around 1,000 sales staff.
APV will give the group a commanding 11 to 12 per cent share of the market for control systems in the food, drink and pharmaceutical industries, well ahead of 9 per cent share held by Tetra-Laval of Sweden. The purchase will aso fill in another piece of Siebe's product portfolio, which already commands number two or number three slots in markets ranging from oil, gas and chemicals, through power and water utilities to pulp and paper.