Howden praised as bid is rejected

Charter International yesterday highlighted the potential of its Renfrew-based engineering business Howden as it rejected a £1.4 billion offer from engineering buy-out firm Melrose as "opportunistic".

The response came after Melrose had pitched a 840p-a-share offer for the company on Thursday

"Having reviewed Melrose's revised proposal… the board of Charter continues to believe that Melrose's revised proposal is opportunistic and undervalues the company and its prospects," it said in a statement.

Charter said its confidence in the "continued strong performance and growth prospects" at Howden, led by chief executive Bob Cleland who is retiring next month, was one of the factors in its belief that the offer undervalued the group as a whole.

"The board of Charter remains committed to maximising value for its shareholders and is exploring a full range of strategic alternatives," the company added.

The latest bid is 8 per cent higher than an earlier offer from Melrose, but is still at the levels Charter shares were trading at in May.

Analysts have said Charter may be worth as much as 900p-per-share with speculation that US firms Lincoln Electric and Illinois Tool Works could be particularly interested in gaining control of Charter's welding tools business ESAB, which is the second-largest in the world.

Shares in Charter closed down 10p at 819p.