ISH engineering support services firm Redhall yesterday announced it had made an offer to buy rival Mount Engineering for around £16.4m to expand into international energy markets.
Redhall, which caters to the nuclear, oil and gas, food, defence, safety and security and transport infrastructure sectors, has irrevocable undertakings or letters of intent from 45 per cent of Mount shareholders in favour of the deal.
The deal values Mount at 70p a share representing a 25 per cent premium on the company’s closing share price on Tuesday. Mount’s share price rose 25 per cent to 55.5p per share on the London Stock Exchange on speculation over the takeover bid.
In a statement chairman David Jackson said: “We believe this acquisition will deliver significant improvement in operating margin and will strengthen the Redhall Group's presence within the global oil and gas markets.”
Mount, which was incorporated in 2007 and has a presence in Europe, the US, Asia and the Middle East, makes threaded adaptors for use in potentially explosive areas with oil and gas and petrochemical industries being its major clients.
The company, which had a turnover of £9.3m in 2009, saw weaker than expected trading in Asia and Europe in the first half of the current year.
Redhall, which had an order book strength of £130m at the end of June and expected benefits from outsourcing trends, said it would fund the acquisition with bank financing and existing cash.
It did not plan to make any material changes to Mount's staffing levels or conditions of employment.
Wakefield-based Redhall has been advised by the Manchester office of European investment bank Altium under a team led by managing director Simon Lord.
Lord is an experienced corporate financier having successfully sold many businesses to plc’s and to private equity.
He sits on Altium’s strategic European board and has over a decade of experience of leading M&A transactions in a variety of sectors including energy and renewables, support services, retail and capital goods.
In March, Lord and his team advised Green Sky Energy on a £10m buy-in management
buy-out of market-leading energy and carbon management specialist, Matrix Energy Solutions.
Redhall is listed on the Alternative Investment Market with a market capitalisation of around £37m. It also owns Booth Industries, which provides a range of integrated design, installation, maintenance and decommissioning services.
The board of Mount Engineering recommended shareholders accept the deal which values the company at 70p for a total valuation of £16.4m
The company reported a turnover of £9.3m for the year ending 31 December 2009.