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- ABC Technologies earned 176 pence per share for TI Fluid Systems earlier this month
- IT bosses at Fluid said the latest proposal “significantly undervalued” the business
Auto parts supplier TI Fluid Systems said it had rejected a second takeover offer last week from a Canadian rival.
ABC Technologies said it made a 165p per share offer for the Oxford-based firm on August 22 before increasing it to 176p per share earlier this month after TI Fluid’s board rejected the original proposal.
The second offer represents a 35 percent premium to the closing price of TI Fluid shares before the offer period began.
Going nowhere: Auto parts supplier TI Fluid Systems last week rejected a second takeover offer from a Canadian rival
However, IT bosses at Fluid unanimously rejected the latter proposal, saying it still “significantly undervalues” the business and its prospects.
ABC, which is backed by Apollo Global Management, said it “remains interested” in a potential transaction and is “considering its position.”
“There can be no certainty that an offer will be made, or of the terms on which any offer might be made, even if the preconditions are met or waived,” the group added.
Founded in 1974, ABC supplies vehicle parts such as defrosters, floor consoles, fuel tanks, trim and door panels to many of the world’s leading automakers.
If it acquires TI Fluid, it would be the latest takeover deal this year involving a foreign company buying a major listed UK company.
Last week, Johannesburg-based AngloGold Ashanti agreed to buy gold producer Centamin for around £1.9bn.
Other deals struck in recent months include Carlsberg’s £3.3bn bid for soft drinks maker Britvic, Thoma Bravo’s £4.3bn bid for cybersecurity giant Darktrace and Blackstone’s purchase of music rights investor Hipgnosis Songs Fund.
ABC now has until October 12 to submit a concrete offer for TI Fluid or withdraw.
But TI Fluid said it was “confident in the strategy and prospects” of the company and “strongly urges shareholders not to take any action at this time”.
‘A further announcement will be made if and when appropriate.’
The group went public in 2017 when its former majority owner, investment giant Bain Capital, decided to list it on the London Stock Exchange.
Russ Mould, investment director at AJ Bell, says the company has struggled since then amid market uncertainty caused by the transition to electric vehicles.
He said the rise of electric vehicles “makes it difficult for TI Fluid customers to make investment decisions, even though TI Fluid has worked hard to become ‘powertrain agnostic’ – meaning it doesn’t matter whether demand comes from electric vehicles or traditional gasoline vehicles.”
‘Against this backdrop, shareholders may conclude that the best thing they can do is accept the money ABC is putting on the table, but this would mean further thinning the ranks of a UK market that has been ravaged in recent years by foreign predators.’
IT Fluid Systems shares rose 13.3 percent to 165.2 pence by midday on Monday, making it the biggest gainer in the FTSE 250 index.
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