Charter Rejects Melrose Offer

Charter International rejected a new offer from manufacturing buyout firm Melrose that valued the British industrial toolmaker at 1.4 billion pounds ($2.3 billion), Reuters wrote Friday. The offer was 8% higher than an earlier offer from Melrose, Reuters said.

(Reuters) – Charter International rejected an improved offer from manufacturing buyout firm Melrose that valued the British industrial toolmaker at 1.4 billion pounds ($2.3 billion), adding that it would look at all alternatives.

“Having reviewed Melrose’s revised proposal and given Melrose’s advisers the opportunity to provide certain important clarifications, the board of Charter continues to believe that Melrose’s revised proposal is opportunistic and undervalues the company and its prospects,” Charter said on Friday.

The latest bid, pitched at 840 pence per share, is 8 percent higher than an earlier offer from Melrose, but is still at the levels Charter shares were trading at in May, before falling sales and management issues pummeled the stock.

Analysts have said Charter could be worth as much as 900 pence per share, and last week a top 10 shareholder told Reuters that Charter was trying to “flush out white knights”, including U.S.-based rival Lincoln Electric .

“The board of Charter remains committed to maximising value for its shareholders and is exploring a full range of strategic alternatives,” the company said in a statement.

Rivals could target Charter to gain control of its welding tools business ESAB, which is the second-largest in the world but has struggled to keep up with competition as costs rise.

Analysts say Lincoln Electric and Illinois Tool Works

, the world’s No.1 and No.3 welding companies, could both be drawn into the fray.

Charter shares were flat at 827.84 pence at 1322 GMT. Melrose was also unchanged at 360.4 pence.

($1 = 0.620 British Pounds)

(Reporting by Adveith Nair; Editing by Sarah Young)