Eglisau, Switzerland, March 2--Forbo Holding AG late February 25 cleared the way for a Sfr705 million ($607 million) takeover offer from private equity group CVC Capital Partners that should bring to a head a fight for control of the company.
Forbo also called an extraordinary general meeting for March 24 where shareholders will vote on several issues that would decide whether London-based CVC or former Forbo executive Michael Pieper gets to run the company, which makes flooring, adhesives and industrial belts.
After several failed attempts to restructure, Forbo last year began takeover talks with at least two financial investors. Fearing the company would be sold to a corporate raider and broken up, Pieper resigned from the board in December and pledged to become a major shareholder. He has since amassed a 26% stake and last week won the backing of Forbo CEO This Schneider, who resigned after the board refused to call off takeover discussions.
"The board of directors believes it is proper to give all shareholders a choice between allowing a minority shareholder to control the company or accepting an offer for all shares in a tender offer," the company said.
Forbo gave CVC until March 8 to announce a tender offer at Sfr 260 per share. That would represent just a 7.3% premium to Forbo's closing price Feb. 24, but the CVC bid and its value has been well-known for months, and Sfr260 would be 70% more than the stock's 52-week low of Sfr152.54 in November. The shares went into a long slump after hitting a high of almost Sfr297 in March 2004.
Still, investors appear uncertain about the company's future. The shares closed up less than 1% to Sfr 251 Monday.
Pieper, owner of Swiss bath and kitchen equipment maker Franke AG, has publicly decried the bid and over the weekend threatened to acquire a blocking minority in Forbo to thwart the plan. CVC would need a little more than two-thirds of the company for its bid to be successful.
"I want Forbo to continue on as Forbo. I'll fight the financial jugglers with everything possible," Pieper said in a Sunday interview in the Sonntagszeitung newspaper. The paper reported that Forbo will pay CVC SFr800,000 million if its offer is not accepted. Forbo could not be reached for confirmation.
At the shareholders meeting, investors must decide whether to lift an 8% voting-rights cap for individual shareholders. Without the limitation, Pieper would gain effective control. Shareholders will also decide if the current board should resign and be replaced by a Pieper-picked panel, which includes former CEO Schneider.
Forbo has received a fairness opinion from and is being advised by Credit Suisse First Boston while Zurich law firm Bär & Karrer is acting as counsel.
