UPDATE 2-Melrose given Sept. 6 deadline for Charter bid

Thu Aug 11, 2011 8:30am EDT

Related Topics

* 'Put up or shut up' deadline imposed by UK Takeover Panel

* Melrose says disappointed at Charter representations

* Charter shares down 1.9 pct, Melrose 3.9 pct lower (Adds analyst comment, details; updates shares)

By Rosalba O'Brien and Adveith Nair

LONDON, Aug 11 (Reuters) - The UK's Takeover Panel has given manufacturing buyout firm Melrose less than a month to make a formal bid for Charter International , putting pressure on the suitor to decide if it will proceed without seeing Charter's books.

The panel, which sets the rules on mergers and acquisitions, said on Thursday it was giving Melrose a September 6 deadline, following representations from Charter's advisers.

Melrose, which buys and fixes ailing manufacturing companies before selling them on, first bid for Charter in late June, when a profit warning sent Charter's shares tumbling.

Charter rejected a sweetened Melrose offer of 840 pence a share, or 1.4 billion pounds ($2.3 billion), in July, and has refused to open its books to the buyout firm.

But Melrose has said it would not be appropriate to proceed with an offer without undertaking due diligence.

A sharp drop of around 20 percent in Charter's share price since July, to around 640 pence, in choppy markets has further complicated the situation, putting pressure on Charter to accept the bid.

It also increases the likelihood that Melrose shareholders may not now be amenable to a bid, analysts say.

"This is a stalemate situation with the bear market coming to Charter's defence," said Panmure Gordon analyst Oliver Wynne-James.

"(The panel ruling) has been overdue but it narrows Melrose's options. It gets a bit messy."

Top Charter shareholders including Aviva and Schroders, who together own 14 percent, have gone public in asking management to open its books to Melrose. Bankers say hedge funds that control up to 20 percent of the company also favour a deal with Melrose. .

Some analysts have said that, should a takeover panel order emerge, it could antagonise Charter's shareholders further.

The 'put up or shut up' deadline procedure is intended to protect target companies from months of expensive distraction. If no bid emerges before the deadline, the bidder must wait at least six months before attempting a fresh approach.

"We are disappointed that Charter has taken this step," Melrose said in a statement on Thursday. "It appears that they are not listening to the clear views of their shareholders."

A Charter spokeswoman noted the overall offer period to the September deadline would be almost 10 weeks from when Melrose made its initial announcement on June 29.

"Charter have been listening to all our shareholders and have given plenty of time to Melrose to make a proposal that our board would find compelling," she said.

Shares in Charter were down 1.9 percent at 645 pence in volatile trade on Monday. Melrose shares were down 3.88 percent at 295 pence, having fallen 10 percent since the company sweetened its approach.

($1 = 0.619 British Pounds) (Editing by Paul Sandle and David Hulmes)

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