Charter Agrees to Pounds 471m Takeover by Lincoln

By Shah, Saeed | The Independent (London, England), April 27, 2000 | Go to article overview
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Charter Agrees to Pounds 471m Takeover by Lincoln


Shah, Saeed, The Independent (London, England)


CHARTER, THE engineering company, yesterday agreed to a pounds 471m cash offer from America's Lincoln Electric Holdings, to create the world's biggest welding equipment group.

The UK company, which dates back to 1889 when it was founded as the British South Africa Company by Cecil Rhodes, said that its depressed share price had prompted it to endorse the 500p-a-share offer. The company existed mainly as a mining finance business until the 1980s, when it branched into engineering.

Nigel Smith, Charter's chief executive, said: "Our prospects have improved but our share price has remained stubbornly low. This deal is a personal disappointment, as it has happened because the stock market undervalued us, but the price achieved gives me professional satisfaction."

The offer is at a 105 per cent premium to Charter's closing share price of 243.5p on Tuesday. Five years ago, its shares traded above 900p.

David Larkam, an analyst at Albert E Sharp Securities, said: "Shareholders will be relieved to get out at pounds 5."

However, he said the price did not look as generous when measured as a multiple of earnings. The offer, which comes with irrevocable undertakings representing 31 per cent of Charter's share capital, is worth 12.5 times City earnings forecast for the current year.

Mr Larkam said that the major question mark over the deal was regulatory clearance and how long that might take.

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