Waterford set for Doulton takeover bid

Waterford Wedgwood yesterday launched a potential takeover bid of its rival china manufacturer, Royal Doulton, worth about £40m.

Waterford Wedgwood yesterday launched a potential takeover bid of its rival china manufacturer, Royal Doulton, worth about £40m.

The luxury crystal and china goods group, which already owns a 21 per cent stake in Doulton, said it had conducted due diligence on its peer and expected to make an offer of 12p a share. This represents a significant premium to Royal Doulton's opening price yesterday, which was 8.37p, but a formal offer has not yet been made and is still subject to resolving certain issues with the board.

Doulton has been struggling financially for some time in the face of slumping sales. It has made 4,000 people redundant over the past six years and closed 200 shops. Production from its historic base in Staffordshire's pottery heartland is due to stop next year, when its last factory closes in favour of cheaper manufacturing processes in Asia.

Waterford said it would be able to keep production of some Royal Doulton products in the Potteries, should its takeover be successful. It would transfer production to its factory near Stoke-on-Trent, although it would not be able to save any of Doulton's planned job losses.

Sir Anthony O'Reilly, who chairs Waterford Wedgwood and is the chief executive of Independent News & Media, the owner of The Independent, said that the merger would help both businesses. Together with his brother-in-law and the deputy chairman, Sir Anthony has a 26 per cent stake in Waterford.

Waterford too has not had an easy time, and said yesterday that sales for the six months to 30 September had dropped 5 per cent compared with last year. It warned its profits would fall significantly below expectations as a consequence.

Sir Anthony said: "The past three years have been turbulent and we would not deny that the financial performance of the company continues to disappoint us all.

"The possible acquisition of Royal Doulton would transform Wedgwood. With Royal Doulton's restructuring largely completed, we could add Royal Doulton's revenues to our top-line sales without greatly increasing our costs.

"This would increase the profitability of the combined businesses."

To fund the acquisition, Waterford announced a rights issue, offering investors five new shares at €0.06 for every existing three shares they own to raise €100m. The rights issue has been fully underwritten.