French tyre manufacturer Michelin has agreed to buy UK engineering company Fenner in a deal worth around £1.3bn.
Under the terms of the transaction, Fenner shareholders will receive 610p in cash per share, which is a premium of around 31% to the closing price of 467p on 16 March. Fenner shareholders will also receive a dividend of up to 2.1p per share to be declared around 25 April.
Fenner said its directors consider the offer to be "fair and reasonable" and intend to unanimously recommend that shareholders vote in its favour.
Michelin said the deal strengthens its engineering capability and enhances its customer and solution focus by enabling it to bring a comprehensive offering to mining clients through the combination of both companies' respective tyre and conveyor belt, product and services offering. It will also allow the group to take advantage of complementary footprints and expand its engineered material division with a complementary high-tech portfolio by combining mutual expertise in reinforced polymers and creating a platform to further expand its polymer activities.
Chief executive officer Jean-Dominique Senard said: "Michelin values the skills, experience and industry knowledge of the Fenner group's management and employees. Mastering high-technology materials is key to creating value in the coming years. Fenner will enable Michelin to accelerate its growth in this area, and to strengthen its position as a key player in the recovering mining markets with a comprehensive offering."
Fenner chair Vanda Murray said: "Fenner has successfully established itself as a world leader in reinforced polymer technology and the board remains confident that Fenner's existing strategy would deliver significant value for Fenner shareholders as an independent company. However, we also believe that the terms of the acquisition acknowledge the quality of Fenner's businesses and the strength of its future prospects, and as such the board intends to recommend unanimously the acquisition to Fenner shareholders."
Michelin expects the deal to be accretive to earnings per share in the first year and to create immediate annual synergies of £30m.
Based in Hessle, Fenner provides conveyor belt solutions and reinforced polymer products for the mining and general industrial markets.
Citi said a counter-offer is unlikely given the cash nature of the proposed deal and the premium offered.
At 0830 GMT, Fenner shares
were up 25% to 613p.