Price-tag almost doubled from £44.5m since flotation

By Hugh Sharpe

Unicorn Industries, the UK abrasives specialist, which has snapped up four smaller firms in the past six months for £13m, is being bought itself. `Consolidation is the name of the game in this industry,’ said David Rimmer, chief executive.

The agreed bid from France’s ninth largest listed business, the Compagnie Saint-Gobain industrial group, values Unicorn at £85.5m compared with a market tag of £44.5m when it floated 30 months ago.

The cash offer of 225p a share represents a 45% premium on the going market price before the announcement. `We think that’s an appropriate valuation for the company,’ Rimmer said.

Apax Partners, the venture capitalist outfit that bought Unicorn from Burmah-Castrol in 1992 and retained a 30.7% stake when it was floated, has pledged to accept the terms that take Unicorn out of the stock market on a multiple of 15.6 times its 1996 earnings.

The board and its associates have also pledged their combined 3% stakes to offer.

Roger Brocklebank, of house broker Albert E Sharp, said the deal has `strong industrial logic’, and that the price was `sensible’ given the present lacklustre view the stock market is taking of small companies.

Unicorn gives Saint-Gobain the UK manufacturing capacity it needs – it has five plants across the country – it will expand its product range and add several `centres of excellence’ (concentrating in one plant anything it does well) and an important research and development facility.

About 950 of Unicorn’s 1700-strong global workforce are in the UK. Jobs look secure: the existing management stays, and workers’ rights will be `fully safeguarded’ said Saint-Gobain. Rimmer does not expect a shake-up. He said the new owner wants to continue the strategy for developing the business.

Unicorn’s product portfolio encompasses a wide range of precision engineering applications in four categories: superabrasives, bonded abrasives, diamond saws and drills, and coated abrasives.