Hexagon of Sweden has substantially increased its offer to take over Leica Geosystems, lifting the Swiss measuring group's stock at the bourse.This content was published on August 15, 2005 - 11:41
The Swedish technology company announced on Monday it had upped its bid by 31 per cent to SFr573 ($458.4) per share, valuing Leica at more than SFr1.44 billion.
In early trading at the Zurich stock exchange on Monday, the Swiss group's stock had risen by 12.8 per cent and closed at SFr565, up 9.9 per cent on Friday.
The new offer from Hexagon follows a white knight bid for Leica last month from the Danaher Corporation of the United States, which offered SFr500 per share.
A white knight is the term used to describe a company that makes a friendly takeover bid to a target company – in this case Leica Geosystems - that is being faced with a hostile takeover from a separate party (Hexagon).
A Hexagon statement said that its increase followed a due diligence review of Leica Geosystems during the last few weeks.
The company is prepared to pay SFr440 in cash plus five class B shares in Hexagon for each Leica share acquired.
"This [due diligence] process convinced us that our initial evaluation of the industrial synergies between Leica Geosystems and Hexagon as well as our estimate of the growth potential of Leica Geosystems were too modest," commented Hexagon chief executive Ola Rollén.
The statement added that the Swedish group was aware that Leica's board of directors was currently bound by an agreement with Danaher and was therefore not yet allowed to support the new offer.
"But we are confident that with this new and very attractive bid... we will be able to convince Leica Geosystems shareholders to join our company and together create the world's leading supplier in the measurement technology industry," Rollén added.
In a reaction to the higher Hexagon bid, the Leica board issued a statement acknowledging the announcement from Sweden.
In accordance with its fiduciary duties it will assess the increased offer and will present its views in a formal report in due course, the statement added.
Before today's increased offer, the Leica board had unanimously rejected the Hexagon bid, recommending shareholders accept Danaher's offer.
The American corporation had confirmed its commitment to maintain the Swiss company's identity and to safeguard the interests of its customers and employees, the board said.
Last week Leica Geosystems chief executive Hans Hess said that it was not easy for the company to accept that it would lose its independence.
"It is hard for us. I think we would have preferred to stay a public company. But I think it's also not the end of the world," he told swissinfo.
"The company can remain as prosperous and successful in a private environment equally well. I think it was not what we intended to do but it is certainly a valid alternative for our customers and our employees," he added.
swissinfo with agencies
Bids for Leica Geosystems:
The Hexagon bid, which includes company shares, is the equivalent of an offer of SFr573 per Leica Geosystems share, valuing the Swiss company at more than SFr1.44 billion.
Danaher's white knight bid is SFr500 per Leica Geosystems share, valuing the company at SFr1.17 billion.
The board of directors of Leica Geosystems on July 26 recommended shareholders to accept the Danaher offer.
Leica Geosystems is almost 200 years old.
The company is active worldwide and has its headquarters in Heerbrugg near St Gallen.
It employs more than 2,400 people in 23 countries, with 900 in Switzerland.
Leica Geosystems recorded a net profit of SFr50.6 million on sales of SFr773 million in its last fiscal year.
This article was automatically imported from our old content management system. If you see any display errors, please let us know: firstname.lastname@example.org