Fears that 1999 will prove a bumper year for corporate financiers appeared justified last week following the £51m hostile bid for Hall Engineering from rival TT.
Hall chief executive John Sword rejected the offer out of hand, saying that it bore ‘no relation whatsoever’ to the value either of the business or its current prospects.
He described the deal as ‘purely opportunistic’, and added: ‘I can see no industrial logic to this bid. It is also, by any measure, a ludicrously low price and a substantial discount to our net asset value.’
While there is some market crossover between the companies, their product ranges differ markedly. Hall’s forte is automotive body pressings and wire and steel products. TT produces automotive sensors, fasteners, cables and other wire products.
John Newman, TT’s chief executive, said the offer had not been intended as a hostile bid, and insisted that it represented good value based on Hall’s recent share price performance and the likely full-year outcome.
TT’s bid of 97p a share was below the Hall share price but came in at the level they were trading at before TT started acquiring Hall shares on January 4.
Hall shares perked up by 12p to 119p in response to the offer, prompting analysts to conclude that TT would have to come in with a better proposal.
‘Even with the underperformance of Hall’s shares, no one is seriously suggesting the company is worth just 97p a share,’ one analyst said. ‘If TT is serious about buying Hall, it will have to come in much higher, perhaps as much as 140 150p.’
Another said: ‘Hall has three very different businesses within the group so we had not seen it as a natural target. There aren’t that many companies that could find synergies to exploit with their own businesses.’
Hall’s shares peaked at 260p last summer but since fell to a low of 65p in December.
The rise since then reflects small-scale buying by institutions, which thought the stock was almost too cheap to be true.