BTR and Siebe to seal GBP 9bn merger despite protests

SHAREHOLDERS in BTR and Siebe were today expected to approve the GBP 9 billion merger of the two engineers, but not without protest from small investors.

Votes from institutions are already thought to have taken both companies above the level needed to clear the deal.

Phillips & Drew Fund Management, one of the largest investors in BTR and a previous "agnostic" on the merits of the deal, confirmed today that it had cast its vote in favour of the merger. Other institutions, who delivered their proxy votes by Monday afternoon, are thought to have followed PDFM in backing the deal. However, BTR directors are likely to face accusations from private investors that they have sold one of Britain's most famous engineering companies on terms which do little justice to the group's distinguished history. Although the deal is described as a merger, analysts have been left in little doubt that Siebe is the dominant partner. Its shareholders will have 55% of the enlarged equity while the position of Allen Yurko, Siebe's chief executive who will take the same role at the combined group, is expected to be cemented within the first year as BTR chief executive Ian Stra-chan looks likely to move to a backseat role. Among BTR's private investors expected to oppose the deal at today's extraordinary meeting of shareholders is Sir Owen Green, the company's former chairman. Siebe, which is holding its own meeting, is likely to get an easier ride although some shareholders are nervous that the company's strong earnings record will be diluted by joining with BTR. Today's vote will also effectively put an end to hopes that BTR shareholders might be rescued by a takeover bid for the company. BTR needs 75% of the votes cast to secure approval; Siebe requires 50%. Daniel Bevan, analyst at Credit Lyonnais Securities, said: "While we would have liked someone else to come into the frame to heat things up a bit, that just hasn't happened. I don't think anyone has been all that enthused by the deal but the truth of the matter is that it is doable. "In a better economic climate people might have been braver about exploring alternative ways of enhancing shareholder value but I don't think this is the right market for that to be happening in." A PDFM fund manager said it had been persuaded to give its blessing to the deal after being initially unconvinced. He said: "We have been doing our due diligence during the offer period and talking to both sides and we have concluded that voting in favour of the deal is the right thing to do."

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