Vesuvius Confirms Foreign Takeover Interest, Shares Surge
The British engineering firm revealed it has received multiple bids from Austrian rival RHI Magnesita, with the latest valued at £1.37 billion.
Shares in British engineering group Vesuvius saw a significant increase on Tuesday after the company confirmed it had received multiple takeover approaches from Austrian competitor RHI Magnesita. The FTSE 250 firm announced that it is evaluating RHI's most recent offer of £1.37 billion, which was made in August.
The latest bid values Vesuvius at 551p per share, representing a 47% premium over its closing price on the preceding Monday. Shareholders would receive 7.1 million new RHI shares, granting them a 13% stake in the combined entity, and would also be eligible for a previously declared 7.1p dividend. This offer follows Vesuvius' rejection of two earlier proposals from RHI in March and June.
Vesuvius and RHI Magnesita both operate in the sector of manufacturing heat-resistant materials used to line furnaces, ladles, and vessels in extreme high-temperature industrial processes, notably steelmaking.
Concerns have recently been raised regarding Vesuvius' steel division, which has reportedly faced challenges due to rising costs and operational and supply chain issues, particularly in North America. AJ Bell investment director Russ Mould noted the persistence of RHI's approach, stating, "Three approaches in six months shows persistence on RHI’s part." Mould also questioned why the information about the earlier approaches was not disclosed to shareholders until now.
Vesuvius indicated that activist investor Cevian, which holds a 14% stake in the company, has expressed support for the deal. "The company appreciates Cevian’s commitment and engagement during this time and remains focused on the interests of and delivering maximum value for all shareholders," Vesuvius stated.
The potential takeover of Vesuvius adds to a trend of London-listed companies attracting interest from foreign buyers. This year has seen several UK firms targeted by international bidders, including Schroders and Beazley, as well as Segro, easyJet, Tate and Lyle, and Evoke, the owner of William Hill.