Foseco Share Discussion Threads

[jeanal] 10/1/2008 18:56

I want my 295p now...

[rivaldo] 22/10/2007 08:27

I also exited last week. The CC fears are one reason, though I think that's probably remote now, but more because of this from the RNS:

"The Scheme is expected to become effective in the first half of 2008."

That's a long time to wait for the dosh (or for something to go wrong!).

[sammu] 21/10/2007 22:00

I read talk of fears of a possible competitions commission enquiry, but if this is the case I don't know how long until they would normally announce it?

[pricemilne5] 19/10/2007 15:34

How much longer before this is a done deal?

[rivaldo] 11/10/2007 08:31

Yep! Game, set and match - nice.

[sammu] 11/10/2007 06:58

Reads like a done deal. Bring on the next one.

[rivaldo] 10/10/2007 13:33

Interesting - buy now for a free 10.5p uplift to the 295p bid price:



"HT: next deal update?

NH: hearing that Foseco and Cookson are close to announcing a deal

NH: two companies were forced to reveal they were in talks last week

NH: Cookson has offered 295p share subject to DD

HT: due diligence

HT: and?

NH: we are hearing that DD has finished, everything is OK and that the deal could be announced as early as tomorrow

HT: speedy

HT: Foseco shares up 0.5p at 287.75p

NH: you can see from the discount to the offer terms that the market expects this deal to go through

NH: So if it is announced tomorrow it won't be a huge surprise"

[rivaldo] 08/10/2007 15:16

Hi Tole, hope you had a good time wherever you were! Looks like FOSE is creeping upwards, though I'm not sure if this is due to realisation that the bid is going ahead or whether other players might enter the fray. I'm holding on for more for the moment.

[tole] 05/10/2007 14:39

Nice one to come back too :)) - only a token like holding - wish I bought a few more back at the time now...

[rivaldo] 03/10/2007 11:56

Definitely worth hanging on I think - chances of a counter-bid or an increased offer quite high according to this (I'll paste it all as it'll disappear after today):



"NH: in yesterday's session we have quite a few people commenting on Cookson and its proposed bid for Foseco

NH: and there has been a pretty positive reaction from the market

NH: shares up 30.5p at 825p

HT: Foseco - makes stuff for foundries - casting and the like

NH: yep

NH: just to recap – a sharp rise in the share price of Foseco saw the two sides forced by the Takeover Panel to acknowledge takeover discussions yesterday.

NH: DD has started and Cookson has indicated that it is prepared to pay 295p a share if things go smoothly

HT: And where are Foseco trading at the moment??

NH: down 2p at 278p

HT: mmm - target down, poss buyer up?

NH: i know it odds

HT: why do the analysts love this deal then for Cookson?

NH: well, it will make Cookson less dependent on the steel cycle

NH: At the moment is biggest division, ceramics makes about 70% of its sales in the steel business

NH: around 20% goes into foundry

NH: If it were to buy Foseco that figure would rise and the Ceramics division would not be so exposed to one industry

HT: OK. But I thought there were question marks as to how Cookson might fund this deal

NH: there are. Here's how the maths work

NH: at 295p, taking into consideration Foseco's debt the purchase price will reach
£575m.

NH: if cookson chooses to debt fund the deal then its
gearing could rise to 150%.

NH: Now that may unsettle shareholders

HT: Why?

NH: because they would be wary of the company taking on a lot of debt at this point in the cycle

NH: the last time Cookson went on an acquisition spree it almost ended in total disaster

NH: and I mean total disaster

HT: Rock style disaster??

NH: yep

NH: it bought a company called Premier Refractories for
£410m in 1999 and by 2002 Cookson was nearly bust

HT: So it looks like there will be a rights issued involved somewhere

NH: I reckon there will be a smallish one, just to put shareholders at ease

NH: On that note, should point that investors and analysts who follow Cookson have been with the company on a trip to their facilities in Poland

NH: And I reckon there will be plenty of hand holding going on

HT: any chance of a counter bid?

NH: could be

NH: Fosceo is the no1 in its field and any of Cookson's competitors
such as RHI and Minerals Technologies, could be interested

NH: actually I am told that MT has a strong balance sheet and could make a cash offer

NH: And given that Cookson will not reap any massive cost synergies from the deal it may struggle to match a higher offer

HT: right - let's see some of this comment then and move on

NH: This is from UBS

NH: We believe that Foseco's activities will be mainly complementary to Vesuvius
given Foseco's strong presence in Foundry applications and Vesuvius' strength in
steel making applications. We estimate that overlapping sales between both
companies are of the order of c £100m and that Cookson could have to shed certain
businesses where market shares become an issue from anti-trust point of view.

NH: this is a bit of comment from Kaupthing

NH: Clearly this is not a knock out price but one priced to give headroom to raise it and still be sufficiently earnings enhancing to Cookson but to ensure the management of Foseco are able to demonstrate to shareholders that they managed to get better value for the shareholders. The group has remained silent so far and they are clearly reviewing their options. We think that they will probably fight for a better price but are not fundamentally opposed to relinquishing ownership.

NH: The possibility of a monopolies review appears to be the reason why the shares are trading at such a discount to the proposed bid price. However it is our view that Cookson want the foundry business and would like the Steel business. Having to divest of the Steel business would not be a deal breaker - note that Steel is expected to make c£4m of EBIT in 2008 vs total EBIT of £54m so it is barely material. The possibility of an increased bid and the high probability of success means that there should be further upside for the shareholders.

NH: COOKSON - The momentum of earnings growth was slowing so the group need to do something. The balance sheet has improved significantly over the last few years and whilst working capital outflows in H1 weakened the H1 net debt position this should reverse in H2. Consequently the need for and ability to do a deal is clear

NH: The combination of Foseco's foundry business with Cookson's ceramic business is an obvious fit and the additional benefits of the cross-over in the Steel business enhance the attractiveness of the deal. Assuming the acquisition is funded through debt and that the new debt carries a coupon of 6.5%, the pro forma debt for the enlarged group is c£720m. Assuming £7m of cost savings then the revised PBT to Dec-08 for the enlarged group is £183m vs £160m consensus - this represents a 14% uplift. The tax rate might be a slight issue as Cookson's rate of 26.5% is 10% lower than Foseco's

NH: In the event that they are net able to get the tax rate of the enlarged group down to their existing rate then the EPS enhancement will be lower than 14%. In terms of debt this would represent c2.5x the enlarged EBITDA and just over 4x interest cover. Whilst the EBITDA multiple is within normal covenant ranges it is towards the high end in our view and we would not be surprised to see future disposals to assist in funding the deal if successful."

[grigor] 02/10/2007 23:33

FINANCIAL TIMES

Cookson in bid talks with Foseco
By Maggie Urry

Published: October 2 2007 13:16 | Last updated: October 2 2007 22:52

Foseco and Cookson are in talks that might lead to a bid for Foseco at 295p a share, valuing its equity at £491m.

The prospect of a merger between the two, which both supply products to the steel and foundry industries, lifted both companies' share prices.


Foseco shares rose 55½p, or 25 per cent, to 280p, while Cookson shares rose 20½p to 794½p, close to the 12-month high of 800p.

The two said there could be no certainty of a bid but Foseco had agreed to give Cookson access to information so that it could carry out due diligence.

If the bid proceeds, Foseco shareholders would also still receive the 1.73p interim dividend declared last month.

Foseco had net debt of £99.5m at the end of its half-year in June, meaning the total cost to Cookson could be approaching £600m.

It is thought Cookson could finance a deal through debt, although it might prefer to issue some shares to raise part of the consideration.

Cookson's ceramics division supplies flow control products to the steel industry and has been benefiting from the growing global demand for steel. It announced a £20m investment on Monday to expand its operations in China.

The ceramics division also has a small but growing business making crucibles for solar panels.

In August – when Cookson reported a 10 per cent rise in interim profits to £68.2m on revenues of £785m – Nick Salmon, chief executive, said the group had set up new plants in China, as well as in Poland and the Czech Republic.

Cookson's ceramics division sales are 70 per cent to the steel industry and only 10 per cent to the foundry industry.

While Foseco also has a business supplying the steel industry, the foundry industry is a more important customer, taking 80 per cent of its sales.

Cookson is regarded as having recovered well in recent years under Mr Salmon, who restructured the company after it ran up heavy borrowings in the early 2000s from an acquisition spree.

Foseco, formerly Foseco Minsep, was taken over by Burmah Castrol in 1990 and was later bought out by management. It floated on the stock market in May 2005 at 100p a share.

Last month it reported interim pre-tax profits of £22m on sales 10 per cent ahead at £210.2m.

Jamie Pike, chief executive, said the foundry division had enjoyed outstanding margins in Europe and Asia, where business was growing particularly strongly in China.

[grigor] 02/10/2007 23:19

- Growth company
- Good play on China and emerging economies
- Bull market in commodities and equities
- Little Debt
- Bid only around 20 x forward earnings

I'd rather wait 2 more years then accept a bid now

I've already been relieved of Enterprise and Sondex in the last few months and a lot of decent companies are being gobbled up fairly cheaply.

[abcd1234] 02/10/2007 22:03

yes indeed sammu, that sort of detail re the dividend implies quite a lot has already been agreed by the two companies, and they're happy with it ;O)

[sammu] 02/10/2007 21:55

I bought some more today. I was enclouaged by the detail given like:
If the bid proceeds, Foseco shareholders would also still get the 1.73p a share interim dividend declared last month.

I don't think a competing bid is likely, but it would be nice. That process has done wonders for Consolidated Minerals in a slightly related sector supplying the manganese for the steel industry.

As normal the news was leaked. How annoyed would you be if you sold out yesterday or this morning to buyers some of which clearly had some knowledge that was not in the public domain.

Sam

[rivaldo] 02/10/2007 19:56

I disagree - I think it would have taken a while to get to 295p.

From the FT:



"Cookson in bid talks with Foseco
By Maggie Urry

Published: October 2 2007 13:16 | Last updated: October 2 2007 13:16

Foseco and Cookson Group said on Tuesday they were in talks that could lead to a bid for Foseco at 295p a share, which would value Foseco's equity at £491m.

The prospect of a merger between the two, which both supply products to the steel industry, lifted both companies' share prices in lunchtime trading in London. Foseco shares jumped 49¾p or 22.2 per cent to 274¼p, while Cookson shares rose 12p to 786p.

The two said there could be no certainty of a bid, but Foseco had agreed to give Cookson access to information so that it could carry out due diligence.

If the bid proceeds, Foseco shareholders would also still get the 1.73p a share interim dividend declared last month.

Foseco had net debt of £99.5m at the end of its half-year in June, meaning the total cost to Cookson could be approaching £600m. It is thought Cookson could finance a deal through debt, although it might prefer to issue some shares to raise part of the consideration.

Cookson's ceramics division supplies flow control products to the steel industry and has been benefiting from the growing global demand for steel. It announced a £20m investment on Monday to expand its operations in China.

While Foseco also has a business supplying the steel industry, the foundry industry is a more important customer, and it is thought the two groups' activities would complement each other.

Cookson is regarded as having recovered well in recent years under Nick Salmon, chief executive, who restructured the company after it ran up heavy borrowings in the early 2000s from an acquisition spree.

Foseco, formerly Foseco Minsep, was taken over by Burmah Castrol in 1990, and was later bought out by management. It floated on the stock market in May 2005 at 100p a share."

[grigor] 02/10/2007 19:10

Hasn't been a PLC for very long - I'd rather keep this one

[rivaldo] 02/10/2007 14:05

Jscowi, don't mention WSM! I would have been happy with the 560p or so I got...:o((

But my family's ISAs and PEPs are doing rather nicely at present.

[philo124] 02/10/2007 12:53

Super Fantastic!!
Just back from Spain & Great News!
Philo

[dixi] 02/10/2007 12:50

Nice surprise! I have only just signed on - but I have decided to take the money and run - all the best to those that still hold.

I had not expected to see this sort of price for many months ahead - on that basis I am happy to bank the gain.

[jscowi] 02/10/2007 12:09

Rivaldo, I agree and I am going to hold on for the time being. I was also in SDX so has been a good few weeks, along with the added benefit of star share WSM to top things off!

[abcd1234] 02/10/2007 11:57

the possibility of a counter bid, now that would be nice

[rivaldo] 02/10/2007 11:54

Hi wipo1. Absolutely agreed, but too early imo to sell.

Firstly, the bid is from Cookson - about as blue chip as you get, so highly likely to go through. Also, note the way the RNS says "limited" due diligence, so I think the bid is almost agreed anyway with just loose ends and obvious diligence points to tie up.

Secondly, it's very early in the process - we may get a counter-bidder turning up, so I'd say there's still a window in which we can sell if necessary.

Happy Days indeed! That's two bids in a matter of weeks for my portfolio with SDX too.

[wipo1] 02/10/2007 11:31

sold, cash in bank, watch them go up more now.lol. Not worried, profit never a profit until its in the bank!

[jscowi] 02/10/2007 11:27

Happy Days!