Sleepy Newman ripe for a hungry predator: comment

Just as everyone else is doing the splits, having decided that conglomerates are out and "focused" businesses are in, along comes a blast from the past to turn back the clock. Jeff Whalley is best remembered as part of the duo at FKI that blazed an acquisition trail across the industrial landscape in the Eighties until it came horribly unstuck with the reverse takeover of the contracting group Babcock.

Well, Mr Whalley is back with another partner and this time FKI's target is the sleepy old maker of architectural hardware (doorknobs to you and me), Newman Tonks, which yesterday found itself on the wrong end of a pounds 196m bid.

Naturally, Mr Whalley and his new partner, Bob Beeston, eschew any suggestion that the bid is a throwback to the conglomerate-happy days of the Eighties when you were only as good as your last and preferably hostile bid.

FKI, they insist, is a reformed character - an international manufacturing group focused on a range of complementary businesses. Whilst it is true, amazingly enough, that this is FKI's first hostile bid, its portfolio of businesses would nevertheless appear to fit the description of conglomerate unless there is some connection between car headlights, conveyor belts and castors that the rest of us have missed.

The rationale for the bid, in as much as one exists, is that by welding together Newman Tonks with FKI's existing hardware group it will create a business that merits the word "core". In reality, it is an opportunist offer. Newman Tonks has performed abysmally on most measures of shareholder return. So much so, in fact, that its biggest institutional investor, M&G, has already thrown in the towel with gusto, irrevocably undertaking to vote its 11 per cent stake in favour of the offer even if a higher bid comes along. For a shareholder that normally backs incumbent management to the hilt, that speaks volumes about the current leadership of Newman Tonks.

For its part, Newman Tonks, has already begun making noises about a white knight - a sure sign of desperation when the offer document has not even been posted and the bid clock is yet to start.

Mr Whalley has already splashed out pounds 260m this year on an Italian manufacturer of car alternators, an electrical power business and another doorknob maker - all in the name of focus, of course.

The combination of a hungry predator, a disillusioned shareholder and an indifferent track record is not the most auspicious platforms from which to launch a defence of Newman Tonks.

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