CHLORIDE, the UK power protection group that is being courted by Emerson, yesterday shocked the markets by announcing it has tied up a £860m deal with Switzerland’s ABB.
ABB is offering 325p a share, plus the payment of a 3.3p dividend, and its bid easily beats an earlier rejected offer of 275p a share from the US power group Emerson.
Although the Chloride board has agreed the ABB bid, there were still hopes yesterday that it might be trumped either by a higher offer from Emerson or by a new entrant.
Chloride, whose technology is used at Arsenal’s Emirates stadium, saw its shares storm well above the ABB offer price, to 343.5p at one point – 19 per cent up on the opening.
Even though the ABB offer values Chloride at a racy 27.5 times future earnings, Seymour Pierce analyst Ian Robertson reckons Emerson could raise its bid as far as 373p to win control of its bid target.
Emerson was keeping its counsel yesterday, issuing only a brief statement to the London stock exchange. The US group said it had noted the development and would make ann announcement in due course.
Analysts reckon that other UK groups such as Invensys, Morgan Crucible, Cookson, GKN, Melrose and Weir, could attrack overseas bids in the wake of the interest expressed in Chloride.
The Chloride management is likely to be kept on by ABB.
ABB’s chief executive Joe Hogan said after delivering the takeover news: “The transaction is in line with our strategy to acquire companies especially in areas where power for demand and automation solutions is converging.”
CREDIT Suisse was behind the bid that never was – Prudential’s £21bn takeover of AIA – but yesterday it emerged as the lead adviser on a bid that is more likely to happen. Credit Suisse is the sole adviser to the Swiss group ABB in its agreed bid for Chloride.
The Credit Suisse Chloride bid team is led by four managing directors, Zachary Brech, Vikas Seth, Laurent Bouvier and Marco Illy. Brech was part of the Credit Suisse team advising the UK government on the recapitalisations of the Royal Bank of Scotland and Lloyds Banking Group deals which put the bank at the top of the advisory league table for UK M&A this year, according to Dealogic. He also advised Resolution on its £1.9bn offer for Friends Provident, Apollo Group on its $483m purchase of BPP and Permira on its $369m acquisition of Just Retirement.
Chloride is being advised by Phillip Robert-Tissot of Citi and by Chris Treneman of Investec, while Greenhill’s Brian Cassin advises Emerson. All eyes will be on Cassin to see where Emerson goes next.