Emerson Electric Co. said Monday it has made a hostile 723 million pounds ($1.1 billion) offer to acquire Chloride Group PLC, a British competitor in providing back-up power supply systems.
Emerson, based in St. Louis, went public with an indicative offer of 275 pence per share for the entire issued capital of London-based Chloride. That represents a premium of 34 percent above the closing price on April 22.
Chloride rebuffed the offer as too low and the market agreed: shares shot 41 percent higher to 295 pence on the London Stock Exchange.
"We believe that Emerson could pay beyond the 300 pence level," said Ian Robertson, analyst at Seymour Pierce.
The two companies confirmed that they had discussed a possible offer by Emerson in 2008, but Chloride said it spurned an offer of 270 pence per share.
"The board of Chloride considers that this latest offer proposal from Emerson continues to significantly undervalue the company and accordingly rejects it," Chloride said in a statement to the London Stock Exchange.
"Chloride is a good business with a solid management team. But in a market where scale is becoming increasingly important, we believe that Chloride will be better able to compete long-term with the benefit of the strength and resources of Emerson," said David N. Farr, chairman, CEO and president of Emerson.
Emerson's products include automation systems, cooling systems for telecommunications and power back-up systems,
In February, Emerson reported that first quarter profit was down 7 percent at $425 million, on revenue of $5 billion.
In the six months ending Sept. 3, Chloride reported that profits slid by 40 percent to 7.1 million pounds; revenue was up 0.3 percent to 152.7 million pounds.