Nothing but negotiation

The Gap Partnership

ABB agrees £860m deal for Chloride Group

Deal could spark a bidding war after Chloride shares surge

08 June 2010

Swiss engineering firm ABB has negotiated the £860 million acquisition of UK-based Chloride Group.

Following the announcement, shares in Chloride rose 18 per cent above the agreed 325 pence per share offer, which may prompt a counter bid from Emerson Electronic.

Chloride, the back-up power equipment providers, rejected a £723 million takeover from Emerson in April, when share prices were 56 per cent lower than their present levels.

Zuercher Kantonalbank analyst Richard Frei expressed his belief that the move would be a success.

He said: "Strategically it's certainly sensible. On the one hand it fits well into the product portfolio, on the other it fits well with the client base they have and opens new possibilities for gaining new clients."

Mr Frei claimed Emerson may make an improved bid, but the price may have escalated to such an extent that they can no longer compete with ABB.

The Swiss firm currently has around $7.1 billion (£5 billion) in cash reserves and has recently agreed to buy Ventyx, a US software maker, for more than $1 billion.

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