13.01.2011

Ashtead joins TVH in bid for Lavendon

A joint statement has been issued this morning by Ashtead and TVH following a joint takeover approach made to the Lavendon board yesterday.

The statement says that the two companies have joined together in the bid, launched by TVH in November to acquire Lavendon and may be prepared to offer a slightly higher price -115p a share rather than the 111p - than that offered by TVH on December 3rd.

If they succeed in their bid the two would split the Lavendon business between them, with Ashtead acquiring the UK operations and TVH the overseas businesses. The joint offer also states that the takeover depends on the Lavendon board recomending it.

The all cash bid would see Ashtead contributing 47.5 percentand TVH 52.5 percent.

The offer remains highly conditional and nothing close to a formal offer that the two will need to make before the February 8th deadline - set by the Takeover Panel earlier this week - expires.

What is not yet known is whether this bid was a planned joint strategy from the outset or if this latest move is an opportunistic one on the part of Ashtead?
This story may yet have a way to run.

A full copy of the statement from TVH and Ashtead is reproduced below.

Vertikal Comment

This is something of a surprise, with little to no indication that Ashtead and TVH were even on speaking terms. The deal if it went ahead would give Ashtead a dominant position on the UK access market, while helping add some balance its business which is currently heavily orientated towards the USA.

At the same time it would put TVH into the international access market with a leading position as well as giving it a leading position in its home market.

While the latest offer has a great deal more credibility than the earlier one, it is still a deal that aims to pick up a potentially valuable asset at the bottom of the market. Shareholders could do far better in a year or two when a major US or perhaps Chinese buyer, with no presence in Europe, might be interested and willing to pay way over the odds to acquire such a business.

If Ashtead/TVH are true to their word and will not offer more than 115p a share, it is hard to believe that Lavendon's directors would recommend an offer that gives shareholders little more than the one they dismissed in December.

Some shareholders may though look at this as ‘A bird in the hand – being better than two in the bush’ ? But given the point in the economic cycle and other possible deals, not to mention the recovery potential of Lavendon on its own, shareholders may well do better waiting for the ones in the bush.

The official statement in full is as follows:

"The Boards of Ashtead Group plc ("Ashtead") and TVH Services N.V. ("TVH"), the principal holding company of Group Thermote & Vanhalst ("TVH Group") (together, the "Joint Acquirers"), announce that on 12 January 2011 they made a joint approach to the Board of Lavendon Group plc ("Lavendon") with a view to making a recommended cash offer for the entire issued and to be issued share capital of Lavendon at 115 pence per share (the "Approach").

The Approach represents:

-a 79.5 per cent premium to Lavendon's average share price over the three months prior to Lavendon entering into an offer period on 3 December 2010; and

-a 45.6 per cent premium to Lavendon's closing share price of 79 pence on 2 December 2010, the last business day prior to Lavendon entering into an offer period.

Pursuant to a memorandum of understanding between Ashtead and TVH dated 12 January 2011, the Joint Acquirers have agreed that in the event that a successful bid completes, Ashtead will acquire the UK businesses and operations of Lavendon and TVH will acquire the remaining parts of the Lavendon Group (Europe and the Middle East). The cash consideration will be split by the Joint Acquirers in the proportion 47.5 per cent. : 52.5 per cent. between Ashtead and TVH respectively.

The Approach is subject to pre-conditions relating to, inter alia, (a) access to and satisfactory completion of confirmatory due diligence; and (b) the recommendation of the Board of Lavendon. Pre-conditions (a) and (b) above are not waivable and in the event that they are not fulfilled the Joint Acquirers will not proceed with an offer and would be bound by Rule 2.8 of the Takeover Code.

The Joint Acquirers will not make an offer at a price either higher or lower than 115 pence per share (reduced by the amount of any dividend declared, made or paid by Lavendon other than a dividend of 0.67 pence per share in respect of the final dividend for the financial year ending 31 December 2010) without the agreement of the Lavendon Board but the Joint Acquirers have no expectation of making an offer above 115 pence per share unless due diligence reveals a material improvement in Lavendon's financial position and prospects versus current market expectations.

This announcement is being made in accordance with Rule 2.4 of the Takeover Code. This announcement does not constitute an announcement of a firm intention to make an offer under Rule 2.5 of the Takeover Code. There can be no certainty that any offer will ultimately be made even if the pre-conditions are met."