18.01.2011

Ashtead/TVH drop Lavendon bid

Ashtead has put out a statement this morning that indicates that it will not proceed with the joint approach it made with TVH for Lavendon.

The statement which is published in full below, says that as Lavendon’s directors have firmly rejected the 115p offer, it has no option but to withdraw its offer.

The two parties – TVH and Ashtead have agreed that neither of them will make a lone bid, at least prior to October 18th, without each others agreement.

Lavendon chairman John Standen, commenting on the announcement, said:
"I'm delighted that this uncertainty has been removed. We have a clear set of objectives to enhance shareholder value and Lavendon is very well positioned. With a strengthened board, supportive shareholders and the business review significantly progressed, we are looking forward to the future with confidence."

Vertikal Comment

This statement, while it appears to end the current run at Lavendon, is odd in that it was all so predictable.
One has to wonder why a company like Ashtead would join TVH to make such an offer that was almost certain to be rejected, and with fixed pre-conditions which were almost certain not to be met.

One cannot but help think that there is, or was, some alternative motive or strategy.

The pressure is of course now on Lavendon to show its shareholders that they will be better off maintaining their investment in the business and that the director’s decision not to refer the approach was the right one.

The directors will be helped in this by the timing of the approach and, barring a major economic upset, they should have no problem at all in delivering far more value over the next few years than the cash offer would have done.

The statement is as follows:

“On 13 January 2011, Ashtead and TVH (together, the "Joint Acquirers"), announced that on 12 January 2011 they had made a joint approach to the Board of 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 represented 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.

The Approach followed the 12 January 2011 announcement by the Takeover Panel that TVH was required to either announce a firm intention to make an offer for Lavendon under Rule 2.5 of the Code by 5.00p.m. on 8 February 2011 or announce that it did not intend to make an offer for Lavendon.

On 13 January 2011, the day after the Approach, the Board of Lavendon announced that it believed that the Approach was opportunistic and significantly undervalued Lavendon and that, accordingly, the Lavendon Board
had no hesitation in unanimously rejecting the proposal.

In their 13 January 2011 announcement the Joint Acquirers stated that the Approach was subject to the following non-waivable pre-conditions; (a) access to and satisfactory completion of confirmatory due diligence; and (b) the recommendation of the Board of Lavendon. Lavendon's rejection means these pre-conditions cannot be fulfilled and as result the Joint Acquirers will not proceed with an offer and will be bound by Rule 2.8 of the Takeover Code."

As a consequence of the memorandum of understanding between Ashtead and TVH dated 12 January 2011, any future joint or sole approach by Ashtead and or TVH, made prior to 18 October 2011, must be mutually consented to by Ashtead and TVH.