UPDATE: Emerson Trumps ABB With Fresh Offer For Chloride

29th Jun 2010 11:24

(Adds analyst comment, detail) By Jason Douglas Of DOW JONES NEWSWIRES LONDON (Dow Jones)--U.S. power and industrial-automation company Emerson Electric Co. (EMR) Tuesday returned with a sweetened offer to buy Chloride Group PLC (CHLD.LN) for almost GBP1 billion, after the U.K. secure power systems company rebuffed an earlier bid and backed a better deal from Swiss engineer ABB Ltd. (ABB). St Louis, Missouri-based Emerson's offer of 375 pence a share values Chloride at GBP997 million. It is 50 pence higher than ABB's 325 pence a share offer and 100 pence higher than its original bid of 275 pence a share. It has also agreed to pay Chloride shareholders a 3.3 pence dividend they were expecting. Emerson Chairman and Chief Executive David Farr said there is a compelling fit between the two firms. Both sell secure power systems used by banks, airports and data centers to keep things running when electricity supplies fail and Emerson wants Chloride to serve as its European hub, Farr said. By trimming staff and combining similar operations, Emerson said a deal could save the combined company GBP33 million in costs a year. ABB, trumped by Emerson's higher bid, said it is now mulling its options, while Chloride said it will talk to Emerson about its offer. At 0951 GMT, shares in Chloride were up 41.5 pence, or 12%, at 390 pence, suggesting investors believe the takeover battle isn't yet over. However, broker Seymour Pierce said it would be surprised if ABB upped its bid, as it would then be paying more than 30 times Chloride's forecast earnings for fiscal 2011. Emerson, worried that ABB might become a threat in the secure power market if it bought Chloride, is already paying "ransom-strip prices," the broker said. The tussle for Chloride follows a long period of anemic activity in U.K. mergers and acquisitions. And it isn't the only sign that M&A activity may be hotting up in the U.K. mid-cap sector, long a favorite hunting ground for foreign buyers. Scott Wilson Group PLC (SWG.LN), an engineering consultant, received competing offers from bigger U.S. rivals CH2M HILL Cos. Ltd. and URS Corp. (URS) this week. -By Jason Douglas, Dow Jones Newswires; 44-20-7842-9272; [email protected] (END) Dow Jones Newswires June 29, 2010 06:24 ET (10:24 GMT)