Wedgwood fails to chip Doulton

On 15 March Waterford Wedgwood failed in a late bid to stop production of a key brand belonging to UK rival Royal Doulton being switched abroad. The Irish-based luxury products group, which holds a 21…

On 15 March Waterford Wedgwood failed in a late bid to stop production of a key brand belonging to UK rival Royal Doulton being switched abroad. The Irish-based luxury products group, which holds a 21% stake in Royal Doulton, wanted the firm to review its restructuring plans. Under proposals announced in February, Royal Doulton said it would transfer production of its Royal Albert brand to Indonesia and cut around 500 jobs in its home town of Stoke-on-Trent. Royal Doulton triumphed by the slimmest of margins at an extraordinary meeting. Votes cast in favour of an GBP 18.9 million rights issue exceeded the required threshold – 75% by value – by only 0.27%. Just before the vote, Waterford Wedgwood accused Royal Doulton of failing to act in the best interests of shareholders in a Stock Exchange announcement. Collaboration discussions had collapsed earlier. The No votes of Waterford Wedgwood – chaired by Sir Anthony O“Reilly – accounted for 95% of those cast against the rights issue, which will allow Royal Doulton to raise GBP 30 million in new debt facilities. It is understood some institutions strongly resented Waterford Wedgwood“s recent overtures to Royal Doulton. They saw the moves as an attempt to establish minority control of a business when it was at its weakest. Waterford Wedgwood decided not to canvass other investors, and was therefore unable to dispel this impression. The Irish group yesterday confirmed a report that it had hoped to buy Royal Albert, one of three core brands around which Royal Doulton plans to rebuild its business. Waterford Wedgwood said its offer of GBP 24 million in cash amounted to 67% of the enterprise value of Royal Doulton for a brand that represented only 16% of its turnover. It was also GBP 5 million more than the proceeds of the rights issue. Waterford Wedgwood had also offered a GBP 12 million, three-year, secured loan at a discounted rate, and suggested a series of commercial collaborations with Royal Doulton. Redmond O“Donoghue, group chief executive of Waterford Wedgwood, said it had eschewed a full takeover bid for market concentration reasons. He said: “We acted today in sadness rather than anger. A collaboration offers the best chance of a new beginning for the UK ceramics industry.” Mr O“Donoghue said he hoped Royal Doulton could be lured back to the negotiating table to discuss a deal that, he said, would protect UK jobs.