Directors at Finnish rock-crushing specialist Metso have revealed the board’s “unanimous” opposition to a takeover bid from Glasgow engineer Weir Group.
The Helsinki-headquartered mining, construction and oil and gas supplier told markets it did not believe the proposal was in the best interests of shareholders and saw “no reason” for further discussion over the approach.
But Weir one of Scotland’s largest industrial concerns, operating across 70 countries responded by insisting that it “continues to believe” in its proposal.
The pumps and valves specialist proposed an all-share merger which would have created a multinational giant worth more than £8.5 billion earlier this month, amid considerable market speculation and to significant analyst excitement.
Its proposal ran into trouble almost straight away, however, when it emerged that the Finnish state investment company was opposed to a plan which would have left it and fellow shareholders with a 37% stake in the enlarged group.
Metso yesterday said it was well-placed to continue as a separate entity. Stock in the company, which rose 20% after the merger bid was announced, sank 7% on the news but recovered to close the day up 1.5% at 29.18 euros on Nasdaq’s Nordic exchange.
“The board of directors of Metso has carefully evaluated the proposal received from Weir and has come to the unanimous conclusion that this proposal is not in the best interest of Metso shareholders,” it said.
“The Metso board remains extremely positive and confident in Metso’s standalone growth and value creation prospects by pursuing its current strategy.
“As a consequence, the board has rejected Weir’s proposal and sees no reason to commence discussions regarding a potential combination.”
Weir, which has a market capitalisation of around £5.3bn on the FTSE 100 Index, said there was money to be made from the deal but pointedly stopped short of saying it would improve the terms of its offer.
“The proposal was structured to enable the shareholders of both Metso and Weir to share in the very significant value creation that would result from material cost synergies in addition to further revenue synergies expected to be generated through the combination,” it said.
“In keeping with the spirit of the merger proposal, Weir had proposed that the combined company would have a significant presence in, and a long-term commitment to, Finland as well as the UK and would be listed in both Finland and the UK with full index inclusion in both countries, alongside shared management and board responsibilities.
“Weir continues to believe that there is a compelling strategic rationale for bringing the two companies together in a merger structure. The board of Weir believes that it has made an attractive merger proposal, and there is no certainty that it will revise the terms of its proposal.”
Weir shares closed the day down marginally at £25.32.