The company has been stalking Wilkes for more than a year, having first bought shares in March 1993. It bought more last month, taking its stake to 29.53 per cent.
Although his interest in Wilkes has long been plain, Mr Abell's formal approach came only last week. Mr Abell said he had spoken to Edward Gottesman, holder of 9.5 per cent of Wilkes through Centenary Corporation, who seemed to think the offer reasonable.
After sounding out its main institutional shareholders, including Edinburgh Fund Managers and PosTel, Wilkes succeeded in forcing Suter's offer up to a price acceptable to investors and the board.
Arthur Watt, chief executive of Wilkes, said many fund managers had come under fire for supporting the company during the hostile bid from Petrocon (now Beverley Group) two years ago. 'This price has vindicated them,' he said.
He added that the two companies made a logical fit, particularly the automotive businesses, and Wilkes would grow faster backed by Suter's financial resources. With gearing at almost 100 per cent, Wilkes would have had to restrict its growth as the economy came out of recession. 'We were having to watch our tracks,' Mr Watt said.
Wilkes made pre-tax profits last year of pounds 1.43m, compared with a loss of pounds 7.1m in 1992. Exceptional items and exceptional operating costs were pounds 1.3m against pounds 8.1m and were almost entirely due to the reorganisation of Avon Transmission, which reconditions gearboxes for public service vehicles.
Mr Abell said the industrial synergy between the two companies made them an excellent fit. After its recent acquisition of two distribution companies, Suter's next step was to buy a manufacturing company, he added. The three new businesses will add around pounds 70m of annual turnover to Suter, which had sales of pounds 180m last year on continuing businesses. Mr Abell said Suter would continue to look for bolt-on acquisitions.
Suter's 1993 profits before tax and exceptionals rose 17 per cent to pounds 19.1m. Gearing at the year end was 11 per cent.
The terms of the offer are one Suter share and 165p in cash for two Wilkes shares. There is a fully underwritten cash alternative at 175p. Suter's shares closed down 1p at 195p yesterday.
Wilkes' shares closed up 17p at 177p. When Suter first disclosed its interest, their price was 47.5p. Suter's holding was acquired at an average price of 90p.
Doug Rogers, Wilkes' chairman, has been asked to join Suter as a non-executive director.Reuse content