TI Group signalled a ramping up of its acquisition plans last week after revealing that aggressive US buyout specialist Kohlberg Kravis Roberts has taken a 4.9% stake in the company.
The £94.4m move by KKR will give TI access to a large pool of capital for big deals which analysts have been urging for some time.
TI rushed forward its annual results to coincide with the announcement. It said KKR planned to become a long-term holder of TI shares. It has agreed not to take more than a 9.9% stake in TI without consent.
Chairman Sir Christopher Lewinton said KKR’s move would benefit both sides and would cement TI’s role as an independent player.
‘There is no chance of them making a bid for TI,’ he said. ‘They have no wish to and we have no wish for them to. Hostile takeovers are a thing of the past and friendly takeovers are a matter of talking, and I don’t see any prospect of TI being taken over.’
KKR’s founding partner, Henry Kravis, will become a non-executive director and help search for acquisitions. These are likely to be in the US and Europe, TI said.
Lewinton said LucasVarity’s aerospace business was a potential target. But this would depend on whether it was put up for sale by new owner TRW.
He accepted the Lucas aerospace business would fit well in TI’s Dowty Aerospace division, where operating profits rose 24% to £59m.
TI Group’s annual figures included a 7% increase in profits to £239m on a 16% rise in turnover to £2.17bn. Group margins fell from 12.7% to 12.2%, reflecting the contribution from lower-yielding acquisitions to be tackled this year.
However, TI said trading was going well, with orders ahead of this time last year.
TI shares soared on news of the KKR deal, gaining 34.5p to close at 445p on Friday.