Carlyle gets more time to prepare Chemring-bid

At Chemring's request, the UK’s Takeover Panel has granted Carlyle a deadline extension until 9 November 2012.

The Carlyle Group has been given more time to negotiate with UK-listed defence group Chemring over a possible take-over bid.

Carlyle, which made a “highly preliminary expression of interest” in August, will have until 9 November 2012 to make an offer, Chemring said in a statement. There is no certainty that at the end of this period an offer will be made. The extended deadline may even be extended further with the consent of the panel, the statement added.

However it is very unlikely the deadline will be pushed back further, legal sources pointed out.  In September 2011, the UK Takeover Panel introduced new requirements on mergers and acquisitions, which included a 28 day bid period. 

“The Code was amended to create more clarity for shareholders. If the deadline is extended further, it creates uncertainty for the shareholders and puts the company in limbo,” one legal source told Private Equity International.

There could be various reasons behind an extension, the source said. “There could be other bidders, they could be doing due diligence, or it could extended because of general uncertainty in the market,” she added. 

Chemring has been struggling recently. The company, which product line includes rockets, C-IED tools and equipment, chemical and biological threat detection systems and screening grenades, reduced its full-year operation profit expectations with £15 million in August. As many European governments have to reduce their budget deficits, defence budgets are being squeezed.    

Carlyle has invested in UK defence business before. In 2003 it bought a 34 percent stake in British defence research group  Qinetiq for £42 million from the UK government.