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REUTERS
London, Nov 23: International engineering groups Siebe Plc and BTR Plc announced plans on Monday to merge to create a new company with a combined market value of some 7.6 billion pounds ($12.63 billion)
The two companies, which have both suffered criticism from investors recently, said the merger would create a world class engineering group with global leadership in the controls and automation industry.
On completion Siebe shareholders will hold 55 per cent and BTR 45 per cent of the new combine, to be initially named BTR Siebe pending a decision on a new name.
Siebe will also supply chairman Lord Marshall and chief executive Office Allen Yurko to the board of BTR Siebe. Deputy chairman Ian Strachan and chief financial officer Kathleen O'Donovan will come from the BTR side.
BTR shares, which had recently hit their lowest level in 14 years, added 23-1/4P -- 24.5 per cent -- to 118-1/2P by 0930 GMT. Siebe gained 12P or 5.6 per cent to 227P.
Despite completion of a radical restructuring earlier thisyear, BTR's share price touched new lows last week on analysts' fears of further profit warnings ahead as trading conditions deteriorate in its main markets.
Siebe's share price has also been under pressure, mainly from similar fears that it faces the threat of a downturn in its main capital goods markets in the US and Europe, in industrial automation and food processing systems and control products for the automotive, consumer appliances and heating and ventilation industries.
"This merger will create the leading controls and automation group in the world, better able to deliver total solutions to our customers," Lord Marshall said in a statement.
"Together, we will be significantly more effective in gaining new business, cutting costs, growing revenue and delivering greater shareholder value than if we had remained separate organisations."
Under the merger plan BTR shareholders are to get 0.533 new BTR Siebe shares for every BTR share held, while Siebe shareholders will retain their shares in thenew entity.
The merger is expected to yield cost savings of at least 250 million pounds per annum from the third year. The company is expecting to achieve 80 million pounds of savings in the first year and 160 million in the second year.
Total costs of achieving these savings over a three-year period are expected to be some 400 million pounds. These costs will be treated as exceptional items by BTR Siebe.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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