Heiton rebuff sees shares rocket 26%

SHARES in Heiton surged 26% yesterday as the builders merchants and DIY group came out fighting in response to Grafton's takeover approach.

Heiton chief executive Leo Martin dismissed Grafton's proposed offer of €6.35 per share as "paltry" and said it failed to reflect Heiton's strategic value.

The market appeared to agree with Mr Martin's assessment as it drove the share price to €6.70, five per cent higher than the value put on the company by Grafton.

Mr Martin declined to comment on yesterday's movement in the share price but said Grafton would need to improve its price before the Heiton board would recommend the approach to shareholders.

Mr Martin described the strategic fit between Grafton and Heiton as "excellent" and said Heiton would be a "deal made in heaven" for Grafton. But he said Grafton's approach only offered shareholders a 20% premium on Heiton's share price on Wednesday, before news of the potential takeover emerged.

Heiton's analysis of previous takeovers in the sector suggested a premium of more than 40% would be necessary. This would imply a price of approximately €7.30.

"The board has duties to all shareholders to get a fair price if the company is going to be sold," said Mr Martin, who added that Heiton was well placed to provide a return to shareholders as an independent entity.

He said Heiton had completed two substantial acquisitions this year and was "very excited" about the company's future prospects. "We can deliver," he said.

A Grafton spokesperson made no comment on yesterday's share price movements and gave no indication if or when Grafton would resume talks with the Heiton board. Mr Martin said Heiton remained open to talks with Grafton.

Heiton has brought forward the announcement of its results for the year to April to next Monday, in an effort to provide shareholders with up to date information to help them assess the company's value.