Emerson abandons $1.4B bid for Chloride

Emerson Electric Co. said it was abandoning its pursuit of Chloride Group PLC, Europe's largest maker of backup power supplies, after the British-based company rejected a sweetened $1.36 billion takeover proposal.

Shares in Chloride sank more than 10 percent after Emerson said it had terminated talks, despite a statement from Chloride that the 270 pence ($5.28) per share offer "undervalued the company and its prospects."

St. Louis-based Emerson had previously proposed paying 255 pence ($4.98) per share, or 657 million pounds ($1.28 billion.

It said its latest offer represented a multiple of 28.4 times Chloride's 2008 earnings per share and a premium of 64 percent to the company's share price of 164.25 pence on March 17, the day before Emerson made its first proposal.

Chloride said it believes it has "a robust business model, clear strategy and strong positions in geographies and higher growth market sectors _ including IT services, data centers, energy and oil & gas _ where secure power is increasingly critical to business continuity."

"Accordingly, the board considers the company to have excellent prospects as an independent group," it added.

The company, which specializes in maintaining uninterrupted power to information technology systems, has customers including banks HSBC Holdings PLC and Barclays PLC, retailers J Sainsbury PLC and Ikea and energy companies BP PLC and Total SA.

Emerson had wanted to buy Chloride to beef up its Network Power division, its fastest-growing unit which produces equipment to protect hospitals, banks and airports from power failures.

ABN Amro analyst Sue Cox has said that recent deals in the sector, such as Schneider Electric's $6.1 billion purchase of American Power Conversion Corp. in 2006 indicated that a bidder for Chloride would have to pay at least 288 pence ($5.64) a share.

The stock was well below that level on Wednesday, closing down 10.8 percent at 252.75 pence ($4.94).

U.S.-based Eaton Corp. and France's Schneider Electric SA have also been considered by analysts as potential bidders.