Castle Support Services Plc (LON:CSU), the AIM listed holding group that owns engineering business Dowding & Mills, is set to be taken over by Sulzer UK after it recommended that shareholders back a £127.5m offer from the Swiss manufacturer. The 108p per share offer represents a 44% premium to the price of Castle shares yesterday. Today its shares soared by 33% to 100p.

Sulzer is listed on the SIX Swiss Exchange and has a market capitalisation of approximately CHF3.2bn (£1.9bn). The group operates in over 120 locations worldwide and specialises in the manufacture of industrial machinery and equipment, surface technology and rotating equipment maintenance. Its key markets include the oil and gas, hydrocarbon processing, power generation, pulp and paper, aviation and automotive industries.

One of Sulzer’s main aims is to increase its focus on service and the proposed acquisition would increase the group’s service sales. The company said the purchase would also expand its technical competences and complement the current activities of its Sulzer Turbo Services division. It added that the proposed acquisition would create a leading independent provider of maintenance and repair services for turbomachinery, generators and motors with potential for further geographic expansion.

Apart from the backing of Castle’s directors, who together hold 4.67% of the group’s shares, the deal has also received irrevocable undertakings from shareholders representing 89.41% of Castle’s share capital held outside treasury.

Commenting on the offer, Christopher Mills, Castle’s chairman, said: “The Castle board unanimously recommends that shareholders accept this offer which we believe represents an excellent opportunity for Castle shareholders to realise a fair and reasonable value for their Castle shares against a difficult and uncertain global economic trading environment.”

In March, Castle reported that it had continued to perform ahead of expectations during the six months to December 2009. Revenue for the period was £61.6m (2008: £63.9m), whilst EBITDA was £10.4m (2008: £10.8m), profit after tax £5.7m (2008: £4.7m), and earnings per share 4.83p (2008: 3.73p).

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