Tuesday, July 27, 2010

Tomkins approves takeover

Belt/hose manufacturer Gates Corp. is a wholly-owned subsidary of Tomkins

The board of Tomkins PLC has approved a $4.5-billion takeover offer from Onex Corp. and the Canada Pension Plan Investment Board, which have teamed up to buy the U.K.-based global manufacturing company.

The U.K.-based Tomkins has two divisions, one of which makes systems and components for automobiles and industry while the other handles air systems components and bathroom fixtures.

Tomkins is the parent of the Gates Corp., headquartered in Denver, Colorado. Among its many products, Gates is a well-known manufacturer of power transmission V-belts for specialty drives and hose and tubing for automotive and industrial customers. Gates also offers a broad line of hydraulic hose and couplings for high pressure and high impulse hydraulic applications, featuring fabric and wire braid designs.

Gates, including Gates Mectrol, manufactures hoses internationally in 19 plants in 8 different countries.

The deal is 2010’s largest buyout globally, according to Thomson Reuters data..

Tomkins employs 25,000 people in 25 countries around the world.

Under terms of the friendly deal, shareholders of Tomkins will get 325 pence a share..

“We believe that our offer represents a great reward for Tomkins' shareholders and a chance for us to build value over a long investment horizon,” said Seth Mersky, a managing director at Onex.

Tomkins chairman David Newlands said the company's independent directors are unanimously recommending that shareholders vote in favor of the transaction.

“After careful consideration the independent directors of Tomkins believe that the cash offer from Onex and CPPIB provides Tomkins' shareholders with certain value today and fairly reflects both the value of the group today and its future potential,” Mr. Newlands said in a statement.

CPPIB, which manages one of Canada's largest pools of capital on behalf of the federal Canada Pension Plan, said it expects the senior management of Tomkins — including chief executive James Nicol — will continue to be involved in the ongoing business after the takeover, according to news reports.

“Tomkins is a strong company with leading positions in its key businesses. We look forward to working with Onex and the management team to continue to support the company in pursuing its growth ambitions,” CPPIB's senior vice-president Andre Bourbonnais said in a statement..

The deal is being made through Pinafore Acquisitions Ltd., a company formed by Toronto-based Onex and the CPP Investment Board.

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