A hostile pounds 172m take-over bid was launched yesterday by Harnischfeger, a US mining and paper group, for Dobson Park, the UK mining equipment maker. The move comes a week after Dobson rejected the American's overtures for a friendly take-over.
Dobson yesterday dismissed the offer as "opportunistic" and "unwelcome", saying it undervalued the group.
Harnischfeger is offering 110p in cash for every Dobson share. This is a 32.5 per cent premium to the Dobson share price last week when the company announced it was holding discussions with Dobson.
However, the City sees the offer as only an "opening shot" as it is below the 113p at which the shares stood at yesterday's opening of trading. Dobson shares closed 9p higher at 122p and the board advised shareholders to take no action.
Commenting on the offer, John Hanson, chief executive of Harnischfeger, said that in a rapidly consolidating market, Dobson had an uncertain future as an independent company. He said he had tried to seek a dialogue with the Dobson board with no success. "It has been very frustrating," he said. The company also says it has other targets in mind if the UK deal did not go through.
The American view is that as the market for mining machinery contracts, economies of scale become increasingly important. A Harnischfeger spokesperson said Dobson's Longwall mining equipment subsidiary would fit well with its Joy mining company. "The environment is changing. There is a lot of consolidation. If you are not one of the big players you are going to have a very tough time." If successful, it is widely believed that the American group would sell off some of the non-core Dobson businesses, which include Britain's Petite, which make toy typewriters. The company says a major restructuring would not be required as the company's mining businesses were complementary rather than competitive.
Of its13,800 workers, 1,700 are based in the UK. Dobson has 3,400 employees.
Dobson Park says the offer does not take account of the potential in the group. Alan Kaye, Dobson's chairman, said the company stood to benefit from buoyant demand for coal products in the Pacific rim.
The company reported pre-tax profits of pounds 10.5m on sales of pounds 100m for the year to December 1994. Its shares have languished at less than 100p for the last seven years.