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Illinois Tool Works is not expecting significant antitrust issues for its proposed takeover of Enodis, an ITW source told dealReporter. He added that ITW expects to have fewer antitrust issues than rival bidder Manitowoc.
ITW trumped Manitowoc’s GBP 2.58 per share cash bid last Thursday with a GBP 2.80 recommended cash counter-bid.
An independent lawyer following the deal pointed out that unlike Manitowoc, ITW had not stated what remedies the companies were prepared to make. The ITW source said this was because no fundamental issues were expected and that all necessary antitrust clearances would already be expected for mid-August. ITW has said it expects the deal to complete in late August.
The independent lawyer cautioned that the timetable set out in ITW’s implementation agreement seems tight if antitrust authorities decide to start an in-depth investigation. He said it appeared from the implementation agreement that the companies agreed 4 November 2008 as the last date to receive the green light from antitrust authorities, as this date was mentioned as clearance date in the document.
The lawyer said that all the company needed to do was wait to get past the 30 day waiting period in the US and if they would get phase I clearance in Europe that was manageable. “But if there are any problems and the deal goes to an in depth investigation it could get difficult with the date,” he said.
For instance, if divestments were necessary the US authorities would usually want to know the buyer upfront before clearing a deal. That would mean the companies would also have to find a serious buyer for divestments if they wanted to get all necessary clearances before the 4 November clearance date.
However, according to the deal source, ITW takes the view that the company has a cleaner deal with greater antitrust certainty than Manitowoc. He noted that a Manitowoc/ Enodis tie-up fell apart once in the past already based on antitrust issues. ITW would have some minor overlaps with Enodis but nothing substantial. They were a good geographic fit, the ITW source said.
The Enodis/ITW implementation agreement, as published on the US Security and Exchange Commission (SEC) website, states that the parties shall file the premerger notification form in the US within ten business days of the release of the press announcement, which was published on 8 May. At the European Commission, ITW shall file draft documents by six weeks from the release of the press announcement and a formal notification of the deal within a further four weeks thereafter.
Meanwhile, Manitowoc is still considering launching a counter bid for Enodis, its listed UK counterpart, it is understood.
A source familiar with the situation said Manitowoc is still very interested in Enodis. The source said that Manitowoc had conceded on many fronts to get this far with its bid and it has not given up yet.
Last week listed US rival, Illinois Tool Works, came in with a counter offer of GBP 1.2bn (EUR 1.515bn) bid for Enodis.
Manitowoc will show its hand by the time of the Enodis shareholders’ EGM in mid-June, the source added. ”Independence is no longer an option for Enodis, it’s now just a question of price,” the source said, adding that if Manitowoc thought it did not have a chance it would have made an announcement.
A source close to Illinois Tool Works said that it had an advantage because it has fewer competition issues than Manitowoc.
The first source said, however, that Manitowoc is open to making competition remedies so the question is just the price. The source noted that the share price for Enodis is trading 2p above the ITW offer price so clearly some people are considering that there could be a counter offer. Manitowoc was not available to comment on the situation.
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