Standard Life Investments attacks Tomkins' proposed sale deal as 'too cheap'

ONE of the key shareholders in British engineering company Tomkins said yesterday it would vote against the takeover of the company if it is recommended at the current offer price.

David Cumming, head of UK equities at Standard Life Investments, expressed concern that the board of Tomkins had opened its books to a consortium which has pitched a bid at 325p a share, valuing the company at 2.9 billion.

Private equity firm Onex Corporation and the Canada Pension Plan Investment Board announced the offer on Monday.

But critics were unhappy that the bidders had been offered access to the books ahead of shareholders and said it was an attempt to acquire a British firm on the cheap with apparently little resistance. There was concern that the timing of the bid was based mainly on the weakness of sterling.

Tomkins, whose businesses range from valves and industrial drive belts to baths and air conditioning equipment, said that scrutiny of the books was at an advanced stage, suggesting the deal would go ahead.

But Standard Life Investments last night said it would not back the bid at the offer price. It holds 2.97 per cent of Tomkins' stock and Cumming issued a statement stating: "We are disappointed that the board of Tomkins has agreed to open the books to a consortium to acquire the company at 325p, in cash per Tomkins share.

"We feel that at this price the proposed bid materially undervalues the group and its prospects. Should the board choose to recommend a bid at this level, we will vote against the transaction as we do not believe that it is in the best interests of shareholders."

Shares in the company soared 63.9p to 294.3p on the day of the announcement, touching 314p at one point.

Tomkins revealed the approach as it said first-half sales had risen 23 per cent, boosted by car scrappage schemes, but second-half sales were "unlikely to be as strong" given global economic uncertainty.

Some analysts thought the offer could attract interest from other suitors. However, there were no signs of a rival bid. Shares closed last night at 307.2p, a rise of 7.2p.

Once known as the buns (Rank Hovis McDougall) and guns (Smith & Wesson) company, Tomkins is now focused on Gates, the automotive and industrial parts group.