TI Fluid Systems rejects two bids from Canadian rival

Auto parts supplier TI Fluid Systems said it rejected a second takeover bid from a Canadian rival last week.

ABC Technologies announced on 22 August that it had made a bid of 165p per share for the Oxford-based company. Earlier this month, the bid was increased to 176p per share after TI Fluid’s board rejected the initial offer.

The second offer represents a 35 percent premium to TI Fluid’s closing share price before the start of the bidding period.

However, TI Fluid bosses unanimously rejected the latest proposal, saying it still “significantly undervalues” the company and its prospects.

ABC, which is backed by Apollo Global Management, nevertheless said it was “interested” in a potential transaction and was “considering its position.”

“There can be no assurance that an offer will be made, nor what the terms may be on which an offer might be made, even if the conditions are satisfied or waived,” the group added.

Founded in 1974, ABC supplies automotive parts such as defrosters, floor consoles, fuel tanks, trim and door panels to many of the world’s largest auto manufacturers.

If it acquires TI Fluid, it would be the latest takeover deal this year in which a foreign company buys a prominent British listed company.

Just last week, Johannesburg-based AngloGold Ashanti agreed to buy fellow gold producer Centamin for around £1.9 billion.

Other deals struck in recent months include Carlsberg’s £3.3 billion bid for soft drinks maker Britvic, Thoma Bravo’s £4.3 billion bid for cybersecurity giant Darktrace and Blackstone’s acquisition of music rights investor Hipgnosis Songs Fund.

ABC now has until October 12 to submit a concrete offer for TI Fluid, otherwise the company will withdraw.

But TI Fluid said it has “confidence in the company’s strategy and prospects” and “strongly urges shareholders not to take any action at this time.”

‘A further announcement will be made if and when necessary.’

The group went public in 2017 when its former majority shareholder, investment giant Bain Capital, decided to list the company on the London Stock Exchange.

Russ Mould, investment director at AJ Bell, notes that the company has been in trouble since then due to the market uncertainty created by the transition to electric vehicles.

He said the rise of electric vehicles makes it difficult for TI Fluid’s customers to make investment decisions, even though TI Fluid has worked hard to make itself “powertrain agnostic,” meaning it doesn’t care whether demand comes from electric vehicles or traditional gasoline vehicles.

‘Against this backdrop, shareholders may conclude that the best option is to take ABC’s money, but this would mean further thinning out the UK market, which has been decimated by foreign predators in recent years.’

TI Fluid Systems Stock rose 13.3 percent to 165.2p at lunchtime on Monday, making them the biggest gainer in the FTSE 250.