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Crane fights off take-over
Page 32
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THE OFFER of 27p a share made for Crane Fruehauf Ltd by the Fruehauf Corporation of America (CM October 22) does not even cover the company's net assets.
These amounted to over 50p a share at December 27 last year, a press conference at Crane Fruehauf's merchant bankers in the city was told last week.
The board is strongly recommending that shareholders reject the offer.
There are aspects in Crane's past relationship with Fruehauf which have been unsatisfactory. It was,suggested that Fruehauf axles should be imported from the United States or from a Fruehauf plant to be located in Europe. Crane's axles are currently made for the company by a British factory in a Development Area.
, The British axles are high quality and made at a more competitive price. If the Crane management had deferred to the wishes of Fruehauf in this matter the company would have been dangerously dependent on imported axles and profit margins would have been reduced.
British management have developed new markets: exports have increased from £600,000 in 1971 to over £7,700,000 in 1975. In 1976 they will be £9m.
This bid — "derisory," says the board — could be an opening skirmish. So could a higher bid succeed? There is always the possibility that the Monopolies Commission might not be too happy about control of 50 per cent of Britain's trailer-container industry going overseas.
Meanwhile, the Treasury have given permission for Crane to increase net ordinary dividend to 2.15p per share for the current year (1975: 0.89p). This gives an income of almost two-and-a-half times that of the previous year and a gross yield, at the offer price, of 12.25 per cent.
In any event, Crane intends to terminate a licence agreement with Fruehauf in April, 1979, which is the earliest opportunity.
The board believes that Crane no longer receives worthwhile benefits from the licence agreement under which Fruehauf is obliged to supply technical and design information.