Melrose increases offer for Charter as bidding war heats up

WARWICKSHIRE-based engineering turnaround specialist Melrose has increased its offer for Charter International as the bidding war for the welding and gas handling group intensifies.

Melrose has been forced to increase its offer after a rival bid for Charter was submitted last month.

Charter’s shares rose on the news, with prices up almost 6% in early trading.

Melrose’s previous offer, proposed on July 14, 2011, offered 850p per share on the assumption that that no dividends would be declared or paid.

In a statement, Melrose said: “The board confirms it has made a revised proposal to the board of Charter International indicating that Melrose is prepared to increase the value of its possible offer by 18p per share.

“In addition (the offer) allows Charter shareholders to retain the interim dividend of 8p per share declared on July 26, 2011, which is payable on September 2, 2011 to Charter shareholders who were on the register on August 5, 2011.  Melrose’s previous proposal of July 14, 2011 was 840p per share assuming that Charter did not declare or pay any future dividends.”

The increase comprises 553p in Melrose shares and 297p in cash for each Charter share.

The Charter board has said it will consider the revised offer and make a further announcement in due course.

In the meantime, it has agreed to grant Melrose access to company information to allow it to complete its confirmatory due diligence.   

Meanwhile, Melrose has announced the appointment of Justin Dowley to its board as an independent non-executive director with immediate effect. Mr Dowley, 56, is currently chairman of Intermediate Capital Group plc, a specialist investment and asset management company. Mr Dowley is also a director of a number of private companies including Ascot Authority (Holdings) Ltd. Until recently he was vice chairman of EMEA Investment Banking, a division of Nomura International plc, having previously been a founder partner of Tricorn Partners, head of Investment Banking at Merrill Lynch Europe and a director at Morgan Grenfell.

Christopher Miller, Melrose chairman, said: “We are delighted to appoint someone of Justin’s calibre and are very much looking forward to working with him. The board are confident that Justin’s extensive experience will add complementary skills and expertise to the existing board of directors and the audit, remuneration and nomination committees.”