Tomkins gets flak for £3bn takeover deal
INDUSTRIAL components manufacturer Tomkins faced another headache from one of its leading shareholders yesterday after recommending a £2.9bn takeover offer from a Canadian consortium.
Tomkins chairman David Newlands urged investors to accept the 325p per share bid from private equity player Onex and the Canada Pension Plan Investment Board, saying it reflected “both the value of the group today and its future potential”.
But David Cumming of Standard Life Investments, which owns nearly three per cent of the company, made a second appeal to other shareholders not to back the takeover. He said: “In contrast to the chairman, we do not expect the majority of Tomkins shareholders to support a deal whose valuation of the company is, without a shadow of a doubt, too low, and also provides massive incentives to the outgoing management team to deliver returns to private equity rather than to current shareholders.”
Cumming’s remarks will strike a chord with smaller shareholders who have accused chief executive Jim Nicol of working too closely with the Canadian investors during the process. Management will take up to a 15 per cent equity stake in Tomkins if the deal goes through.
Tomkins needs 75 per cent approval to seal the buyout. It already has the backing of Schroders, its largest shareholder, and JPMorgan Asset Management. Some minor holders known to be negative on the deal, such as Artemis, have sold out.
The board claimed the valuation was justified because the company had become too exposed to the US consumer in recent years and faced a weak second half in 2010.
ADVISER
JPMORGAN CAZENOVE
TOMKINS was advised by a JPMorgan Cazenove team lead by head of corporate broking Ed Byers.
Byers is also advising International?Power on its deal with GDF Suez and has a long list of transactions to his belt, including the buyout of UK glass maker Pilkington by Japan’s Nippon Sheet Glass in 2006 and Marconi’s £1.2bn sale to?Ericsson in 2005.
Byers has been supported by Barry Weir, a veteran mergers & acquisitions banker, and Patrick Magee.
They were up against a Citigroup team working for Onex and the Canada Pension Plan Investment Board led by Philip Robert-Tissot. Robert-Tissot has advised on high-profile takeovers such as Kraft’s siege of Cadbury and Spanish operator Ferrovial’s $30bn (£19bn) purchase of British airports firmBAA in 2006.
More recently, Robert-Tissot advised power generator Chloride on its takeover by US player Emerson.
Also working on the Citi side was Grant Kernaghan, who guided outsourcing company Xchanging through its £530m flotation in 2007.