Top investors in U.K. engineering firm Charter International are threatening to block a proposed takeover unless its U.S. suitor, manufacturing firm Colfax Corp, pays more than GBP10 a share, the Sunday Times reported.
Aviva and Schroders, which are Charter’s two biggest investors with a combined stake of 17.5%, have indicated they will vote against the Colfax offer, the report said.
Colfax offered 910 pence a share for Charter, valuing the business at GBP1.5 billion but Aviva and Schroders prefer a rival 850 pence cash-and-shares proposal from Melrose, a U.K. turnaround specialist, it said.
Chris Murphy, U.K. equities fund manager at Aviva, was cited as saying: “The Colfax bid materially undervalues Charter against what we believe Melrose will deliver for us and our clients in the medium to long term.”
The report said Aviva and Schroders believe Melrose’s strong track record of reviving and selling on under performing businesses means it will deliver better long-term returns.
Two weeks ago, the Daily Telegraph cited Schroders fund manager Richard Buxton as saying: “As far as we understand, the general consensus among most Charter shareholders is that they would have preferred to have seen the company recommend the Melrose offer because it would allow investors to participate in any future upside.”
London, September 25, 2011 (Dow Jones)
