Pilkington rejects £2bn takeover

Glass maker Pilkington rejected a takeover approach today from its biggest shareholder on the grounds that it was too low.

Pilkington told Nippon Sheet Glass that the proposed offer of £1.97bn (€2.9bn) “materially short of a price which the board is prepared to accept”.

It came as the Merseyside glass maker posted a 22% hike in first-half profits to £99m (€145m) despite tough market conditions and soaring energy costs.

Earlier this week, Pilkington and Japanese firm Nippon confirmed they were in preliminary discussions over a cash offer for the company.

Nippon owns nearly 20% of Pilkington and it was thought it could generate savings from combining its UK subsidiary NGF Europe with the headquarters of Pilkington as they are both based in St Helens.

Pilkington said today that the proposed offer of 150p a share was unacceptable. Its shares closed at 150.5p last night and it remains to be seen whether Nippon will return with an improved proposal.

Pilkington said today that a 9% increase in revenues to £1.3bn (€1.9bn) was driven by its core businesses of supplying car and construction companies, boosting profits in the six months to September 30.

Pre-tax profits of £99m (€145m) compared with £81m (€119m) in the first half last year and were slightly ahead of City expectations of around £97m (€142m) .

Pilkington chairman Nigel Rudd said: “The group’s results in the first six months of the year are in line with our previous indications, despite challenging market conditions and increases in energy costs.”

Profits in the building products business were up 10% to £69m (€101m) on the back of improved efficiency and a 1% rise in sales.

Rudd said this was achieved despite “intense competition” in the sector.

In the automotive business, sales increased 15% to £630 million following several successful launches of vehicles fitted with Pilkington products. Operating profits were up £13m (€19m), or 27%, to £61m (€89.8m).

Rudd said: “Although conditions in most of our markets remain challenging, we have continued confidence for the full financial year.”

Shares in Pilkington have more than doubled in the last two years as rumours of a takeover swept the market.

French firm Saint-Gobain, which owns the Jewson building materials chain and is currently locked in a hostile bid battle for plasterboard maker BPB, has also been mentioned as a potential suitor.

Pilkington employs around 24,000 people and has plants in Birmingham and Doncaster. It has sales and distribution operations in more than 130 countries.