Heiton Group accepts 660 cent a share takeover offer by Grafton

BUILDERS merchants Heiton Group has accepted a 660 cent a share takeover bid from its larger rival Grafton.

The two sides have been in talks for the past few days to agree a price. The deal is a mixture of cash and Grafton shares and is the second offer that had been put to the Heiton board.

Grafton, which owns the Woodies DIY chain and is the largest builders merchants in the country, had approached Heitons in June with a 635 cent a share bid. That was rejected as not valuing Heitons fairly, and its chief executive Leo Martin described it as paltry.

Shareholders will now get 264 cent in cash and 0.58667 of a new Grafton share for every share in Heitons they hold. Based on Thursday's Grafton closing price, this values the deal at 660 cent per share. Shareholders will also get the 10.7 cent a share final dividend from Heiton.

The two sides had re-entered takeover discussions over the past few days about a deal. The Irish Takeover Panel had set a deadline of yesterday evening for talks to conclude with a deal or Grafton would have had to walk away from the deal for a year.

Heitons said the deal was good for shareholders as the take-out price is a 27% premium to its closing price before the first offer emerged.

Grafton said the offer was its final one, unless a third party came forward with a higher offer.

Shares in Grafton were flat on the Irish market at €6.76, valuing the company at €1.4 billion. At one stage yesterday, Heitons lost nearly 5% of its value, but ended the day down just 0.8% at 600 cent.

The deal ends two weeks of consolidations in the sector. Last week, British firm Wolseley snapped up the Brooks Group and is expected to launch an assault on the DIY and merchanting market.

Heitons had looked at the Brooks business itself, and had it succeeded, it would have prevented the Grafton takeover.