Triggering an “unfriendly” takover battle

Triggering an “unfriendly” takover battle

By Virginia F. Bodmer-Altura

Swiss Uster® Technologies the worldwide leading quality control specialist is the target of an unfriendly takeover desire by Japanese engineering company Tico Toyota Industries Corporation

Already over months there was some rumour in regard to takeover lust for Uster® Technologies by Tico. Of course it was unfounded and probably suggested only on the fact that the Japanese firm owns already a stake of 22.5% (as of June 30, 2011) of the Swiss firm. Today Tico controls already 28.5 % and has a contract with another major shareholder Alpha Private Equity Funds 5 to take over their shareholding of 21.9 % in Uster®. With the execution of this contract they will have the majority of Uster® and will be the decision makers. Due to this contract and the rules of Swiss Stock Exchange Toyota is forced to make an offer to all other shareholders. Other shareholders were end of June Alicide Ltd. with 27.9 % (at the time of the stock exchange listing they owned 36.0 %), Board and Management Group are holding 1.2 % and other shareholders including the public are holding 25.5 %. Further 15.6% are not registered.

At ITMA Barcelona Uster® Technologies had an impressive presentation and an excellent response at their booth. The company has a good product pipeline in the fields of quality and control for the global textile industry and a high R&D potential for further innovations. The market response is such that quality is synonymous with Uster®. The company is present with its products in all important textile markets and also in China and cooperates there also with textile universities.

Today Japanese Tico and already minority shareholder of Uster® launched an unfriendly takeover offer to buy all outstanding shares 21% above the share trading price at the stock exchange over the last two month or CHF 38 per share. Board and management voice the opinion that this offering does not reflect the true value of the company and its future prospects. With other words, the offer is undervalued, unacceptable and not in the interest of the shareholders of Uster®.

The board of Uster® will inform its shareholder as soon as the detail written offering is on the table and warns its shareholders not to jump to quick solutions and stay away of any action in regard of Tico’s offer. Uster® has hired Credit Suisse as a counsellor in this takeover battle.

My personal view of these facts: It was to be expected that the appetite of Toyota was growing to “swallow” Uster® entirely, but one has to see that Toyota was also an opportunity for Uster® enjoying the backing of a well known large company. Stating this it means also that Toyota witness the progress of the Uster® product pipeline and might feel that Uster® has now the critical size that further development would be better backed within Toyota itself than as a standalone company.

The other shareholders of Uster® have always voiced trust in the future of Uster® when they bought the shares at their issue but because the buyout of Uster® from the former Zellweger-Uster group was leveraged by high debts and therefore those shareholders up today never made any money from their Uster® investment. The original share price was over CHF 50 and thus the Tico offer of CHF 38 might not seem attractive at first glance, however giving it a second thought they might be inclined to sell to Tico or are forced this majority shareholder has the intention after all the legally followed path to discontinue the listing at the stock exchange. We keep you posted on further development!

What does it mean for Uster® customers? Well, Japanese managers and owners of foreign companies have always respected the origin of their acquisitions and Uster® is well anchored in the textile markets as a “Swiss precision and quality company” they will continue the use of this marketing tool and to allow the company to grow probably to a much more funded future that might be also in favour of textile customers around the world. For Toyota this is a small company but of particular value and because of the troubled financial and political world the quality acquisition with a bright future is almost possible for peanuts. Additionally, also Toyota has excellent products and world class R&D and maybe the combined potential of both companies will enhance the world textile industry much more in regard to quality and control as well as in sustainability!

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