Tomkins acts to halt slide in share price

Click to follow
The Independent Online
Tomkins has moved to scotch rumours that its planned $1.16bn acquisition of US automotive products business Gates Rubber is on the rocks.

Yesterday it also promised shareholders a 15 per cent dividend hike for the year to April in an unusual attempt to halt the recent slide in its share price. Worried by the company's apparent failure to complete the Gates acquisition, announced six months ago, the market had pushed the shares from a high of 294p in January to 247p this week.

Greg Hutchings, chairman, said the acquisition of Gates, a privately owned automotive products maker, had proved more complicated than anticipated. He thought it was the first time a public company from the UK had attempted to buy a private US company with preference shares. The lack of a precedent had caused a mountain of regulatory work.

No promises were made about when the deal would be sewn up, but Mr Hutchings hoped to be able to announce completion within a few weeks. The delay had meant that Tomkins was unable to give its usual briefing to analysts before its close season and the lack of information had led to the shares' recent weakness.

As well as promising the higher dividend, the 13th consecutive rise of at least 15 per cent, Tomkins said it would report profits of at least pounds 320m in July. That was in line with market expectations and the shares bounced 8p to close at 255p yesterday. Mr Hutchings accompanied news of the proposed dividend rise with a warning that bad weather had hit some of its markets, especially holding back US lawnmower sales in the important March and April buying months.

Tomkins has been one of the FT-SE 100's steadiest performers in recent years but has fought a constant battle to overcome adverse City sentiment.

Investment Column, page 23