SCOTTISH engineering firm Weir yesterday abandoned its takeover bid for Finnish peer Metso, after a second offer was rejected by Metso’s board.
FTSE 100-listed Weir’s improved bid would have valued Metso at around €4.5bn (£3.7bn), up by around 20 per cent from April’s approach.
But Metso’s board said that the revised offer “continues to significantly undervalue Metso and the value to shareholders of Metso continuing as an independent company pursuing its own growth strategy”.
Metso, which is a leading player in the mining equipment sector, argues that Weir made its offer during a trough in the market and that there is room for upside once the investment cycle turns.
Weir said “it believes it made a compelling proposal but remains financially disciplined and therefore does not intend to pursue this opportunity further at this time”.
Analysts had said that a deal, which would create a dual-listed company worth £8.5bn, could have marked the return of M&A activity among industrial companies.
Weir said Metso shareholders would have owned about 40 per cent of the combined group and that the two firms would have made at least £150m of cost savings per year.
Weir had made an improved bid of €30.49 per share, up from its initial approach of €25.6 per share. Its new proposal also included a special dividend of €2.13 per share to all shareholders of the enlarged group.
Bank of America Merrill Lynch was advising Weir on the bid.
Weir’s shares closed down 20p at 2,584p.