After the big bid battle,
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Steve Geary asks . . •
15 IT BACK TO SQUARE ONE?
A FEATURE of the commercial vehicle scene during the past few weeks has been the abortive bids by RollsRoyce Motor Holdings to take over Fodens.
Now, after two bids and several apparently sour statements, Rolls does not seem
likely to renew its bid to re-enter the heavy vehicle market.in a big way.
The story began with an unannounced bid of £7.9 million for the family firm which brought Fodens' !chairman Leslie Tolley back from holiday to take charge of the situation. The first bid was composed of seven 25p ordinary Rolls shares for every 12 Fodens 50p ordinary shares or seven Rolls 25p preference shares for every three Fodens preference shares at £1 each.
And Fodens chief executive William Foden did not take kindly to that offer. "We do not welcome any takeover approach from anyone at this stage of the company's recovery," he said.
However, he gave some ground and added: "but in the interests of shareholders and employees, we will look at the offer and report on it."
As R-R soon realised, this did • not mean that the company was bluffing its way to a higher bid. Fodens turned down the bid — the second rebuff for Rolls in 12 months — and it was left to R-R to look further at its bid. Meanwhile, the two companies were still linked with Rolls supplying its 265 engine for the larger Fodens. But a story related by a distributor told the tale.
"We were looking for a Rolls-engined Foden for a customer and we tried everywhere in the South East, but eventually, we had to go back to the Cheshire works — nobody had a Rolls-engined Foden for sale," said the distributor.
Then came an offer from Rolls' merchant bankers, Lazard Brothers, who said they would take up any Rolls shares that Foden shareholders did not want but had become entitled to at 61p.
Coupled with the earlier £7.9 million bid, this made each ordinary share worth 35.5p for the ordinary shares and 142p for the preference shares.
William Foden went on record as saying that the bid would represent a bad investment for Fodens' shareholders — and that was the end of round one of the great takeover bid.
Having lost the first round, Rolls-Royce's board and bankers had to look again, at its intentions. In 1976, it had been fought off by the Manchester engine-makers, Gardners, but had later bought a 16.7 per cent package of shares.
The next question was: -Is the same thing going to happen again?"
Again, the reluctant Fodens directors were faced with looking at a new bid from Rolls.
This time, the bid was worth an extra £3 million at £10.9 million, but still it impressed neither shareholders nor the board of the embattled Fodens.
Still William Foden was cautious, and Fodens shares soared from the normal level to 52.8p for the ordinary shares — a rise of an average of 80 per cent — and to 211.2p for the preference shares.
In the meantime, what was RRMH going to do?
Rolls-Royce group managing director David Plastow answered that one. "The company will definitely not become a captive market for our engines," he said. "It will continue as a separate company with a separate identity and a separate financial set-up,said Mr Plastow.
He presented an impression of Fodens becoming premier manufacturer in the heavy vehicle market — much the same as Rolls is in the car market.
Then as the last possible post. before the expiry of the bid was collected, Rolls' bankers mailed a last plea to Fodens shareholders.
This letter described previous approaches by Fodens to Rolls with propositions of a takeover for the company — and later Mr Plastow confirmed that, when Foden faced dire financial straits some years ago, there had been approaches.
But Foden denied any such involvement with R-R, despite the R-R statement: "We cannot understand, therefore, why your board is not convinced of our argument.
A director of Fodens' merchant bank, John lmpey, commented on the letter to shareholders. "Claptrap,he said, and claimed that Rolls was trying to sway Fodens shareholders with talk of over-optimistic profit forecasts.
Rolls-Royce was "nitpicking," he said, and had come to its forecast claim by merely doubling up the first half of the financial year figures — healthy in themselves.
And so the fight turned sour.
William Foden was said to have made a few off-the-record comments about the Rolls letter, but in public, he said nothing, presenting an image of the letter as being beneath contempt. With the closure of the t came the news that Rolls h been well and truly rejected the shareholders. The compa had managed to gain accE tances for the offer from or 6.95 per cent of the ordint shareholders and 14.63 cent of the preference sha holders.
Now came the chivalro acceptances of defeat and success.
A Rolls statement said: 'Ai are pleased to learn that Fode is to remain an importz independent part of the Briti truck industry."
And in reply, a "delic ed'' Mr Foden said: "Our cic and harmonious relationst with the Rolls-Royce Mot( company is long-establish and one we are sure will quickly reinstated.
"We are very encourag with the confirmation of t confidence our shareholdi have in us as an independE company,said Mr Foden.
• And immediately one fi[ was over the eternal rumour a link between Foden and E was circulated — only to emphatically rejected by bc companies.
For Rolls-Royce the empt sis turned to other quarters. T fight for Gardner had begun but it was to be a short-liv affair which R-R turned, to advantage with quiet shz deals on the Stock Exchange.
Despite one rejection Gardner, last year, Ro entered the fray. Whether a.5 serious contender to take cm. Gardner or to make sor money with share deals is r known.
Still Rolls-Royce is out in t cold. Some blame for this h been attributed to the co pany's failure to produce a ca alternative to its offers Fodens — but others still pre to see Fodens stay an indep( dent family company.