Will there be a bidding war for UK-based critical power vendor Chloride Power? ABB Ltd today made an offer of 864 million pounds ($1.3 billion) for Chloride, topping a $1.1 billion offer made in April by American critical power firm Emerson Electric. The Chloride board, which had rejected Emerson’s offer of 275 pence per share, has accepted ABB’s 325 pence per share offer.
“The directors of Chloride consider the terms of the acquisition to be fair and reasonable,” the board said ina staement, noting that it had been advised on valuation by Citi and Investec. “The directors of Chloride intend to recommend unanimously that Chloride Shareholders vote in favor of the scheme.”
Joe Hogan, the ABB chief executive, told the Guardian that his company had been talking to Chloride about a potential deal for 18 months. “Obviously, Emerson putting them into play forced us to move faster than we would have, but we had been talking to them for some time,” he said.
The key question: Will Emerson now respond with a higher offer, creating a bidding war for Chloride. Both Emerson and Chloride are major providers of electrical infrastructure for data centers. The two companies discussed a deal with Emerson in 2008 that valued Chloride at 270 pence per share offer, a price that was rejected as too low.
At the time of its April offer, Emerson said it believes a combination with Chloride will “create a powerful force in the global UPS.” The offer reflects the focus on global reach in the data center equipment business. One of Emerson’s historic rivals, APC, was acquired in 2006 by the French conglomerate Schneider.
Emerson said buying Chloride would solidify its position in Europe and other key geographic markets, transform Chloride from a regional player into a global competitor, and leverage Emerson’s customer relationships to accelerate growth of Chloride’s industrial UPS product offering.