SHARES in Arjo Wiggins Appleton, the UK paper and packaging group, closed more than 27% higher yesterday after the company said it was in talks with majority shareholder Worms et Cie that could lead to a full-
blown takeover offer from the French-based group.
In a statement released yesterday morning, Arjo said Worms could offer up to 255p per share for the 60% of the company it does not already own.
A further announcement will be made ''as soon as possible'', Arjo added.
Arjo's shares, which have underperformed the forestry and paper sector by more than 60% during the past five years, responded strongly to the news. The stock finished yesterday's trading 52.5p higher at 244.5p, making it one of the day's best performers.
The statement coincided with an announcement by Anglo-American, in which the conglomerate said it would bolster its forest products business with acquisitions amounting to $778m (#520m).
But while consolidation is taking place within the industry,
a source close to Arjo described the move by Worms as a ''value play''.
He indicated the French
conglomerate, which has owned its 40% stake in Arjo for several years, wanted to take the company private in the face of rising pulp prices and a more competitive trading environment.
Worms has interests in a wide array of activities, but has no paper and packaging holdings other than its Arjo stake. Based in Paris, the holding company is majority owned by Italy's Agnelli family, a major shareholder in Fiat.
Arjo employs about 900 people in Scotland. They work out of plants in Fort William, as well as the Stoneywood and Dyce facilities in Aberdeen.
The group has undergone aggressive restructuring during the past 18 months under the leadership of executive chairman Ken Minton. This has involved cutting capacity by closing plants in Wales, and Continental Europe, along with other staff reductions in the UK.
Last week, Arjo said the current financial year had started well, with profits before tax and exceptionals in the first three months amounting to #71.8m on turnover of #881.2m. This compared to pre-tax, pre-exceptional profits
of #59.7m in the same period
last year.
''This improvement stems from both demand, which has been satisfactory in all areas, and
the benefits of the restructuring and manufacturing efficiency programmes initiated last year,'' the company said in last week's statement.
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