City welcomes Weir’s decision to opt put of Oz bidding war

By PETER RANSCOMBE
Published on 14/03/2012 00:00

SHARES in Weir Group rose almost 3 per cent yesterday after City analysts “applauded” the engineering firm’s decision to pull out of the takeover battle for Australian peer Ludowici.

Australia’s Takeovers Panel last week rejected a second attempt by the FTSE 100 constituent to block Danish rival FLSmidth from increasing its offer for Ludowici.

Glasgow-based Weir decided to withdraw from the bidding war, leaving an opportunity for the Danes to complete the deal.

Keith Cochrane, Weir Group’s chief executive, told The Scotsman earlier this month that a takeover of the Australian firm “would not come at any price”.

Cochrane yesterday added: “Whilst Ludowici represented an attractive opportunity to expand our market-leading Australian business, our focus in any acquisition is to create value for Weir shareholders.

“A materially-higher offer would not have met the rigorous financial criteria which we apply to all acquisitions.”

Jonathan Jackson, head of equities at Killik & Co, said: “Although [it] would have been a good fit with existing activities, we applaud the decision to exercise financial restraint.”

FLSmidth kicked off the bidding war for the firm in January with a A$7.20-a-share offer, which Weir then trumped with a A$7.92 bid.

The Danish firm then raised its approach to A$10 despite its chief executive initially saying it wouldn’t go higher, before withdrawing his statement. Weir upped its offer to match the A$10 figure but was then gazumped within hours by an A$11 bid from FLSmidth.

The Scottish engineer asked the Takeovers Panel to block the Danes’ higher bid but the request and a subsequent appeal were both turned down.

Weir has grown extensively in recent years. In January, it agreed to buy American pump and valve specialist Novatech for £113 million, following the group’s £431m takeover in November of Seaboard Holdings.

Shares in Weir closed up 51p last night at 1,992p.