Tomkins 'winner' attacks 'cheap' sale

Published on Tuesday 31 August 2010 22:38

A FORMER boss of engineering group Tomkins yesterday attacked the £2.9 billion takeover of the firm as "disappointing" for shareholders, despite the fact he stands to make £31 million from the deal.

Greg Hutchings, who left the group at the turn of the century after 17 years, said he was "amazed" at the low price of the deal, which was approved by shareholders on Tuesday.

US private equity firm Onex Corporation and the Canada Pension Plan Investment Board gained approval for their bid by a margin of nine to one.

Hutchings told a newspaper: "I am amazed that some shareholders are happy to see Tomkins being sold at the bottom of the market."

The deal was also voted through despite the opposition of major investor Standard Life, which believed that the price undervalued Tomkins' future prospects.

David Cumming, head of UK equities for Standard Life Investments - which holds a 3.17 per cent stake in Tomkins - raised concerns the takeover would be a sign to international investors that UK companies could be offloaded at bargain prices as a result of the economic downturn.

He said: "We also hope that this vote will not be seen as a signal that UK shareholders are prepared to sell assets too cheaply as a consequence of current depressed market conditions."

Jonathan Jackson, head of equities at Killik & Co, identified a number of UK industrial firms - including defence electronics outfit Cobham, welding equipment maker Charter International and valve maker Rotork - which "would appeal to overseas buyers".

But he warned: "It is always difficult to identify the next bid target. However, in the case of the companies highlighted, there are positive fundamental reasons to hold shares regardless of whether a takeover emerges."

Tomkins, which started life in 1925 as a maker of buckles and fasteners, became a global industrial firm after embarking on a major expansion programme in the 1980s and 1990s.

Major acquisitions included the US-based Gates Corporation in 1996, but the group was focused on motor engineering under current boss Jim Nicol.

In the first half of the year, Tomkins, helped by improving market conditions, boosted revenues by 23 per cent to $2.4bn (1.6bn). Pre-tax profits more than doubled to $261m.