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April 4, 1996


By CBR Staff Writer

Siebe Plc yesterday came out with details of its promised bid for Unitech Plc, which has agreed to recommend shareholders to accept 0.804 of a new Siebe share for each Unitech for the shares Siebe does not already own, valuing the company at 520m British pounds. The deal will expand Siebe’s Asian presence and make it a leading supplier of transformers and control systems used to regulate production processes and control temperature and air conditioning levels. Siebe was always expected to get into a huddle with Unitech for the balance of the equity once Elektrowatt AG sold most of its stake in Unitech, 25%, to Siebe in mid-March. Elektrowatt has another 4%, over which it granted Siebe an option. The Swiss utility wants the cash to fund its acquisition of Landis & Gyr AG, and was in too much of a hurry to do the gentlemanly thing and get the shares placed in the market, giving its former invest companies a chance to retain their independence. It also has a big stake in component distributor Electron Eurodis Plc, and that company looks to have little chance of remaining independent given the ruthless way Elektrowatt has disposed of its Unitech shares. We see clear strategic synergy, particularly in the electronic powers control industry, Siebe’s chief executive Allen Yurko told Reuters. And when you throw in Unitech’s brilliant presence in Asia, this could really end up as a powerhouse acquisition, he added. The jewel in UK-based Unitech’s Asian crown is its 50.6% of Nemic Lambda KK, a publicly-listed Japanese supplier of power controls. Siebe is offering 659.28 pence per Unitech share as cash alternative to the 0.804 of a share a share exchange offer. The price represents a premium of 39% over Unitech’s closing price on March 15 when Siebe announced it had bought the Unitech shares at 590 pence per share from Electrowatt. Unitech shares jumped 31 pence to 705, and, as is usual with the shares of the bidder in these things, Siebe shares fell 21 to 876 pence. The Unitech takeover will not dilute earnings per share and will help boost earnings a year after the acquisition is completed, Yurko said. The bid, which Yurko expects to be completed in the next 30 to 40 days, will not result in any major restructuring as Unitech’s operations are highly complementary to those of Siebe, Yurko added. He said that Siebe remained in the market for any small, bolt-on acquisitions, but that no further big deals were in the pipeline. A hostile bidder could still muscle in on the party, but that seems unlikely since as well as the 25% it holds already, Siebe, has received undertakings from Electrowatt and Unitech directors representing 4.1% and 1.2% of the equity respectively, so 30.3% is locked up. Market-makers were saying in London that buying Unitech shares and selling Siebe shares looked like a cost-effective way into the group.

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