Elswick agrees bid from Ferguson

ELSWICK, the recovering label printer, has abandoned plans to expand by acquisition and is recommending a cash and shares offer from Ferguson International worth 18.25p a share.

Announcement of the bid sent Elswick's shares up from 12p to 17p. At the bid price it is valued at pounds 37.7m.

Denis Cassidy, chairman of Ferguson, said: 'The acquisition . . . will create a substantial business better equipped to meet the increasingly complex demands of the 1990s.'

Last year Elswick sold Bomford Turner, its grass-cutting machinery subsidiary, to concentrate on label printing. In 1991 it sold its cycle manufacturing arm.

Ferguson prints labels mainly for the clothes and food industries. Elswick will take it into other sectors including toiletries, drinks and car care products.

Ferguson said sales were running ahead of last year, especially at home. Conditions in Europe remained difficult.

Terms of the offer mean that for every 29.2 Elswick shares Ferguson will offer one of its own and 175p cash. The bid represents a 52 per cent premium to the share price before the announcement.

In the year to January Elswick reported profits before exceptional items and tax of pounds 3m, up from pounds 1.9m. Ferguson made pounds 11.7m in the year to February compared with pounds 9.7m in 1993.