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Williams shares plunge as Tyco takeover talks fail

Bill McIntosh
Tuesday 13 July 1999 23:02 BST
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SHARES in Williams, the fire protection and security equipment provider, plunged 13 per cent yesterday when the UK group announced for the second time in nine months that talks with Tyco International of the US about a possible takeover have been terminated.

"Whilst there is clear industrial logic in putting the two businesses together, it has become evident that some regulatory uncertainty and limited prospects for immediate large-scale cost savings have undermined the ability of Tyco to achieve its target returns," Williams said.

The stock fell 60p to 356p - just below the level where Williams traded prior to announcing the latest talks on 7 June. The first set of talks failed last autumn. City sources said the talks foundered when Tyco realised that the price needed to secure the approval of the Williams board would have led to a dilution of the US company's price-earnings rating of 40 times historic net profit. Tyco stock has doubled during the past year amid an acquisition binge.

Williams executives had been seeking around 500p per share, valuing the company at pounds 3.65bn. That would have been a 28 percent premium to the stock's price before news of the latest talks surfaced.

Tyco, based in Bermuda but run from New Hampshire, is a conglomerate with holdings in disposable medical products, electrical components and other fields. With the two firms already the biggest fire and security companies worldwide, the sources also said a deal would have faced regulatory problems.

Williams, meanwhile, pledged to return to the acquisition trail if necessary to boost the double-digit annual sales growth of its service businesses.

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