Alfa Laval makes $701 mln cash bid for Munters-UPDATE 2

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Monday September 06, 2010 04:22:07 PM GMT

* Alfa Laval offers 68 SEK per Munters share

* Major stakeholders with 29.6 percent of shares accept bid

* Bid a 36 percent premium vs share price over past 3 mos

* Munters shares jump, Alfa edges higher

(Adds analyst comment, share price, background)

By Niklas Pollard and Sven Nordenstam

STOCKHOLM, Sept 6 (Reuters) - Swedish engineering group Alfa Laval on Monday offered to buy smaller domestic peer Munters for 5.03 billion crowns ($701.2 million) in cash to add climate control technology to its product range. Alfa Laval, a maker of fluid-handling equipment, pumps and heat-transfer products, said it was offering 68 crowns per Munters share, compared with the 52.5 crowns closing price on Friday.

Munters shares opened 31.4 percent higher to stand just above the bid level at 69 crowns by 0703 GMT, while Alfa Laval shares rose 1.1 percent to 115.1 crowns, outperforming a 0.5 gain in the Stockholm bourse's blue chip index.

"The acquisition of Munters will complement our selection of products," Alfa Laval Chief Executive Lars Renstrom said.

"Munters is a company with strong positions that we can further develop through Alfa Laval's industrial structure and strong presence in the fast-growing markets of South America, Eastern Europe and, not the least, Asia."

Alfa Laval said AB Industrivarden and Investment AB Latour, which together own 29.6 percent of Munters shares, had agreed to accept the offer under certain conditions.

SEEN AS GOOD FIT The company said the bid, to be financed using funds held by Alfa Laval as well as existing and new credit facilities, represented a premium of about 36 percent over Munters' volume-weighted share price over the past three months.

Munters agreed in June to sell its services arm MCS to private equity firm Triton and analysts said it was uncertain whether the remaining group had sufficient resources on its own to expand its business on a global scale.

"They are a good fit in many ways," said an engineering analyst who asked not to be identified.

"The premium is good and we think this looks sensible. Alfa is a bigger company with a bigger global range. Munters is expanding in China and Asia, and Alfa has a stronger position there."

Demand for the products of engineering firms such as Alfa Laval nose-dived as the global financial crisis struck in 2008, sending economies across the world into recession.

But a recovery, led by a upturn in emerging markets in Asia and Latin America, has over the past year lifted orders and sales at manufacturers strongly, though activity in mature markets on both sides of the Atlantic has remained slower. ($1=7.173 Swedish Crown) (Additional by Oskar von Bahr; Editing by Erica Billingham)

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