Melrose on acquisition trail with bid for Charter International

WARWICKSHIRE based engineering turnaround specialist Melrose has mounted a bid for welding and gas handling group Charter International.

Reports said the approach valued the Charter businesses at around £1.3bn and the bid comes a week after Charter parted company with its chief executive following a profits warning.

In a statement, Alcester-based Melrose said: “Following speculation concerning Melrose and a possible offer for Charter, the board of Melrose confirms that on June 28, 2011 it made a preliminary approach to the board of Charter with a view to entering into discussions about a possible offer for Charter at a value of 780p for each Charter share, a premium of 30% over the closing share price on the day prior to the approach.

“Any offer for Charter by Melrose, if made, would consist of a mix of cash and share consideration. However, Melrose would like to emphasise that there can be no certainty that an offer for Charter will be forthcoming. A further announcement will be made in due course if appropriate.”   
 
In reply, Dublin based Charter said: “The board confirms it has received a highly preliminary, conditional and opportunistic approach from Melrose, which may or may not lead to an offer for the entire issued share capital of the company.

“The board will meet to consider this unsolicited approach and a further announcement will be made in due course.”

Melrose acquires engineering businesses, improves them by a mixture of investment and changed management focus and aims to turn them around in a timeframe usually of between three to five years once a return has been realised.

It is thought to be on the acquisition trail again following the sale of its Dynacast business earlier this month in a deal worth £360m.

Charter International owns two international engineering businesses – welding and cutting company ESAB and compressor firm Howden.

ESAB formulates, develops, manufactures and supplies consumable products and equipment for use in the cutting and joining of steels, aluminium and metal alloys.

Its range of welding consumables includes electrodes, cored and solid wires, and fluxes. Sales are split between the developed economies of Western and Northern Europe and North America, and the developing economies of Central, Eastern and Southern Europe, South America and Asia. ESAB derives over 80% of its sales from welding consumables and equipment and the remainder from cutting and automation solutions.

Howden designs, manufactures, installs and maintains air and gas handling equipment for use in the power, oil and gas, petrochemical and other industries. Its core products include centrifugal and axial fans, air and gas rotary preheaters and compressors.