Melrose demands more on Charter's finances

CHARTER International, parent company of Renfrew-based engineering company Howden, came under pressure to open its books yesterday after predator Melrose said it may make a higher offer.

Melrose said it would consider improving its proposed 840p-a-share offer if information was found during due diligence which demonstrated that it has "materially undervalued" Charter.

Charter has rejected the latest offer that valued it at about 1.4 billion and said the increased bid still undervalued the company. Melrose, which specialises in buying what it believes to be underperforming industrial businesses and selling them on after restructuring, made an initial 780p-per-share proposal at the end of June.

Analysts believe Charter could be worth more than 900p-a-share and that the company may be trying to flush out white knights including US rival Lincoln Electric. Singer Capital Markets analyst Jo Reedman said: "We estimate a maximum price of 950p if an offer from a third party is received and Charter becomes the subject of a bidding war."

One major shareholder in Charter said yesterday that it believed the company should allow Melrose access to its books.

"I don't see how Charter can not respond by opening their books as Melrose has even said they will pay more if there's something good in there worth paying for," said the investor. Shares in Charter closed up 11p at 797p.