Japan“s Nippon Sheet Glass is examining the accounts of Pilkington Plc, meaning that a takeover of the UK firm will not be agreed for several weeks, sources familiar with the situation said.
The two…
Japan“s Nippon Sheet Glass is examining the accounts of Pilkington Plc, meaning that a takeover of the UK firm will not be agreed for several weeks, sources familiar with the situation said. The two companies have reached an understanding on value of around GBP 1.65 a share, which would value Pilkington at about GBP 2.2 billion (USD 3.91 billion), the sources said on 23 January 2006, adding that no formal offer had been made. The offer, if it goes ahead, will be an improvement on the indicative cash offer worth GBP 1.58 a share made in December 2005, which Pilkington rejected. The talks could still come to nothing, they said. Pilkington said December 2005 that the price, which had been raised from the initial offer worth GBP 1.50 and a second verbal proposal at GBP 1.55, was still too low to recommend. Pilkington and Nippon Sheet Glass, which already owns 20% of Pilkington, both declined to comment. Pilkington shares have risen around 20% since late August 2005 when the first bid talks emerged, in line with the UK“s building materials sector, which has seen a number of mergers and acquisitions in recent years. The approach for Pilkington comes in the wake of Saint-Gobain“s takeover of BPB in December 2005, the acquisition of concrete producer RMC by Mexico“s Cemex in March 2005, and the takeover of Aggregate Industries by Swiss cement firm Holcim in February 2005. In the global glass market, where demand is seen growing at some 4% per annum, Pilkington faces difficult conditions as it generates more than half of its revenues from a mature European market, while rising raw materials and energy prices put pressure on costs. However, the group reported a 22% rise in pretax profit for the 1H 2005-2006 to end-September 2005, helped by a restructuring drive. The 180-year-old firm is about to enter the final stage of a three-year turnaround, having reduced costs and cut its workforce by 15,000 to 24,000 since the mid-1990s as it focuses on its main autoglass and construction markets.