Further offers expected as Emerson rejected
Shares in Chloride rocketed by over a third on the prospect of attracting further bids following its rejection of an offer from rival Emerson Electric. The rise occurred after the power protection group announced it had rejected a £657m approach from its larger US rival.
Chloride, the world's fourth-largest uninterrupted power supply specialist, said the 255p a share cash approach from Emerson, the world number one, “materially undervalued the company and its prospects”.
Chloride's share price, already trading near an all-time high, climbed 72p to 280p. The market clearly feeling that Emerson may return with a higher offer or rival bids could come in, potentially from Eaton of the US or France's Schneider Electric.
Chloride's closing price gave it a market capitalisation of £709m.
According to the Financial Times, Emerson, which was forced to reveal its offer by the Takeover Panel, said there could be no certainty that a follow-up offer would be forthcoming.
The two companies said they had been talking about a deal since 18 March, but Chloride has since upgraded its earnings forecasts and the shares are up more than 80% since mid-March, undermining the basis for an agreement.
Chloride is expecting another year of record sales, up by as much as 30%, as firms rely on a small clutch of specialists to safeguard a growing reliance on technology that demands constant and reliable power supplies.
Electrical and Mechanical Contractor