AB Electronic agrees bid from TT Group
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Your support makes all the difference.AB ELECTRONIC Products has agreed a bid from TT Group, the acquisitive mini-conglomerate, at a price below its market value at the start of trading yesterday.
TT's offer values the financially stretched components maker at pounds 13m, against a market capitalisation of pounds 16m yesterday morning.
AB's shares opened at 56p but fell back to 50p on the news. The offer comprises 10 new TT shares for 37 shares of AB, valuing the latter's at 49.2p. There is a cash alternative of 45.1p.
The companies have been in talks since July. John Newman, joint managing director of TT, said that bid speculation had boosted AB's price.
Sir Peter Phillips, AB's chairman, said the board believed TT's offer valued the company fairly. 'We still believe that, had we completed our restructuring programme, we would have seen a return to operating profits in the second half, but the costs of reorganisation are high and trading conditions are very difficult.
'Our borrowings are relatively high and TT is very strong financially, so we felt a merger was the best option.' AB lost pounds 11.2m before tax in the year to 30 June and had debts equal to 89 per cent of equity.
TT is placing 4.6 million new shares with institutional investors, raising pounds 7.7m to help finance the takeover. TT shares fell 4p to close at 182p.
Mr Newman said TT would be making changes at AB but he expected much of the management, including Paul Ryder, the chief executive, to stay. Sir Peter is to join the TT board.
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