Royal Bank Private Equity (RBPE) has had an offer of $27.50 a share accepted by Doncasters, a Midlands-based engineering firm.
The bid values Doncasters at about $260.7m.
The offer of $27.50 represents a premium of 8.9 per cent over the closing price of $25.25 on April 27 and a premium of 47.7 per cent on the price of $18.6 in November when the company announced it was looking at strategic alternatives.
“We need critical mass and have been stymied by lack of cash for acquisitions,” said Mike Tilley, company secretary. “We’ve had 120 people look at us. We narrowed them down to 6 and RBS came with the biggest price.”
RBPE is making the acquisition through RCGH, a new company created for the offer. RCGH owns Ross Catherall Group, an engineering company whose operations will be merged with those of Doncasters.
Both firms make precision components for industrial turbines. The combined pre-tax earnings of Doncasters and Ross Catherall last year came to $65.5m.
Tilley could not give details of what will happen next for Doncasters’s management. “We are still waiting for the Royal Bank’s ideas on that,” he said. “It’s anybody’s guess.”
Doncasters was founded in 1778 in Melbourne, Derbyshire, and was acquired by Canadian firm INCO in 1975. It was listed on the NYSE in 1997. The firm acquired quoted precision castings group Triplex Lloyd in 1998.
Doncasters is being advised by CSFB. RBPE and RCGH are being advised by JPMorgan. Debt financing is being arranged by RBS and JPMorgan and managed by RBS and Chase Manhattan.