ABB Launches GBP860 Million Bid For Chloride; Board Backs Deal

ABB Ltd. (ABB) said Tuesday it's launching a GBP860 million offer for U.K.-based Chloride Group PLC (CHLD.LN), the latest in a succession of similar deals as the Swiss engineering giant spends its considerable cash pile.

If successful, ABB's 325 pence-a-share bid would banish St. Louis-based Emerson Electric Co., which has pursued Chloride at least twice. Most recently, Chloride two months ago rejected a GBP723 million takeover proposal--or 275p-a-share--from Emerson as too low.

"The combination of Chloride's strong position in the fast-growing medium- to high-power uninterruped power supplies business with ABB's global reach and complementary power and automation offering provides significant growth opportunities for both businesses," ABB Chief Executive Joe Hogan said in a statement. ABB's offer is 12% higher than Chloride's 289p closing price Monday. Chloride's shares have gained more than 60% so far this year amid speculation Emerson would eventually sweeten its bid, trumping a 8.7% gain in the Stoxx Europe 600 industrial goods and services index.

Chloride's board backs the deal, and shareholders will receive a 3.3p-a-share final dividend, as proposed by Chloride last month, ABB said.

For ABB, Chloride is the latest in a string of deals since May, including software maker Ventyx for more than $1 billion, U.S. measurement product maker K-TEK for an undisclosed price, as well as the $965 million attempt to lift its stake in ABB's Indian subsidiary to 72%, from 52% currently.

Before Chloride and K-TEK, but after the other deals and paying a dividend of CHF0.51 a share, ABB said it had ample financial firepower--roughly $5 billion in net cash--to hunt for further deals.

Monday, ABB's stock, which has declined 2.5% so far this year, closed at CHF19.22, giving the company a market capitalization of $38.97 billion.

Analysts said potential rivals for Chloride could include Schneider Electric SA (SU.FR).

-By Katharina Bart, Dow Jones Newswires; [phone]; [e-mail]