10.03.2010

Tanfield receives offer for Smiths

Tanfield, owner of UpRight and Snorkel aerial lifts has received an offer for its Smith Electric Vehicles business.

The non-binding, conditional offer has been made by its US Joint venture Smith Electric Vehicles US Inc (SEVUS) and could be worth as much as £70 million. Tanfield has given SEVUS four month exclusivity on the deal.

The offer is for Smiths Electric Vehicles, the group’s 49 percent holding in SEVUS, the license agreement between Tanfield and SEVUS and all intellectual property associated with the business.

The deal comprises £37.0 million in cash (equivalent to 50p per share) plus an additional £33.3 million payment in the event that SEVUS of any stock market flotation prior to September 2015. In the case of an IPO going ahead within the timeframe, the deal would be worth 95p a share.

Tanfield has stressed that it cannot be sure that any agreement can be finalised nor whether SEVUS is in a position to raise the finance required for the deal There can be no assurance that an agreement can be reached on these terms, or at all, or that SEVUS will be able to complete the financing required to complete the deal.

Vertikal Comment

Tanfield has previously announced plans to split the company into two – Smiths and UpRight/Snorkel – later this year. This offer conveniently pre-empts that plan.

Smiths Electric Vehicles lost £1.9 million on revenues of £8.1 million in the first half of 2009 with no expectation that the second half was any better. The company is also steadily working its way through its cash pile. The offer could therefore be seen as timely.

There are however a good number of caveats to the offer and it has come from a closely related company with some directors and shareholders in common.

With Electric delivery vehicles becoming a ‘hot item’ and big names taking a greater interest, the development pace and competition is sure to soar. This could be perfect timing for a small loss making company to take the money and run?

No matter how this offer pans out it will raise interest in the business, boost the share price and take the focus off of the year-end results that are due out next month.