Low & Bonar agrees £107m takeover with Germany's Freudenberg

Low & Bonar shares rocketed on Monday after it agreed to be taken over by German technology group Freudenberg for £107m in cash.

The high-performance materials company said late on Friday that it had agreed the deal with FV Beteiligungs-GmbH, a subsidiary of Freudenberg. Under the terms of the acquisition, Freudenberg will pay 15.5p a share in cash for each Low & Bonar share, which is a premium of about 101% to the closing price on Thursday.

The company's directors plan to unanimously recommend the deal, which they deem to be "fair and reasonable".

Low & Bonar's executive chairman, Daniel Dayan, said: "During my short tenure at Low & Bonar, the strengths of our people, technologies and market positions have been apparent, but the group faces a challenging financial position and highly competitive markets. Freudenberg will provide Low & Bonar's businesses and people with opportunities to develop and grow, as well as enhancing the value proposition to the customers of both businesses.

"I said at Low & Bonar's AGM and in Low & Bonar's recent results announcement that we would prioritise reviewing strategic options for the group and seek to realise shareholder value. Low & Bonar's board is convinced that this offer represents an excellent opportunity to realise the value of the group and that this is the right time for Low & Bonar's businesses to become part of a much larger and more diverse group."

News of the acquisition came alongside a trading update in which the company said that "difficult" trading conditions had persisted into the second half. As a result, sales in the third quarter were lower than expected and profit was also below the board's expectations.

"Whilst the group is benefiting from slightly lower than expected raw material costs, as well as the impact of cost saving initiatives put in place in recent months, it is not expected that conditions in the group's markets will improve in the short term and consequently the board does not expect to recover the shortfall in third quarter trading within the current year," it said.

At 0810 BST, the shares were up 106% at 14.70p.