Melrose steers clear of bid war for Charter by holding its price

MELROSE distanced itself from a bidding war for engineering firm Charter International yesterday as investors digested a £1.5bn cash and shares bid from rival US buyer Colfax.

Sources close to Melrose said it would not be tempted to raise its current 850p per share indicative offer, arguing that its bid would allow Charter shareholders to keep their investment in a UK-listed company.

“Melrose don’t get into bidding wars so I don’t think they are minded to raise their offer,” one source familiar with Melrose’s position told City A.M. “It is all about the engagement with shareholders now.”

Some hinted that Colfax’s bid could be hindered by UK funds’ ability to accept the part of the offer issued in US shares. But Charter sources said the “mix and match” offer structure allowed investors to take as much or as little paper as needed.

Evolution Securities analyst Harry Philips said Melrose would not rush. “The key to Melrose’s success has been to correctly price assets,” he said.