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Ennstone PLC (ENN)

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Friday 15 October, 2004

Ennstone PLC

Offer Update

Ennstone PLC
15 October 2004

                            THE REPUBLIC OF IRELAND

                        OFFER BY ALTIUM CAPITAL LIMITED
                      FOR JOHNSTON GROUP PLC ("JOHNSTON")
It was announced on 14 October 2004 that Ennstone now owns or has received
acceptances in respect of 5,919,319 Johnston Shares representing approximately
54.66 per cent. of the existing issued ordinary share capital of Johnston and
that accordingly the offer by Ennstone for Johnston (the "Offer") has now become
unconditional as to acceptances.

The board of Ennstone (the "Board") believes that the acquisition of Johnston
represents an excellent opportunity to deliver significant further value for the
Ennstone Group.

Construction and quarrying

The Johnston construction materials division manufactures concrete building
products and glass-reinforced pipes and also operates coated and dry stone
quarries. It has the following attractions to Ennstone:-

• A historic track record of high profitability - in the year ended 31 December
  2003, it reported turnover of £37.4 million and made an operating profit of 
  £5.9 million.

• Exceptional geographical and strategic fit - the Johnston quarries in the West
  Midlands joined with Ennstone's East Midlands quarries will significantly
  strengthen Ennstone's regional market position.

The strategic value of the Johnston quarrying business has been further
emphasised by the offer by Anglo American plc for Johnston, which was at a 10
per cent. premium to that offered by Ennstone.


Since the announcement of the Offer, Ennstone has received eighteen expressions
of interest from both UK and overseas third parties interested in acquiring the
engineering business of Johnston. The Board has concluded that it will seek to
dispose of Johnston's engineering business and has initiated talks with a
selected number of parties with a view to concluding an accelerated disposal of
this business.

The Johnston engineering division manufactures and markets products in the
specialty vehicles sector. The product range includes road and pavement
sweepers, street washers, refuse trucks, litter collection machines and fire

The division is a world-leading supplier of truck mounted, mid size and compact
sweepers that clean roads, airports, construction sites and pedestrian areas in
municipalities and rural areas across the world. The engineering division
reported turnover of £113.1 million for the year ended 31 December 2003 and
reported a loss of £4.4 million, after an impairment write down of £2.5 million,
and before apportionment of central costs. As at 31 December 2003, the
engineering division had capital employed of £42.3 million.

In April 2004, Johnston appointed a new chief executive with a background in
engineering and subsequently announced that it was conducting an operational
review of its engineering activities with a view to developing a world-wide
sweeper strategy to leverage its global position and to drive cost improvements.
Johnston announced on 28 September that "a cost reduction programme is underway
which will achieve significant annualised cost savings."

Disposal programme and use of proceeds

The Board will use the net proceeds from the sale of the engineering business
and other non-core assets within the Johnston Group to reduce the enlarged
Group's debt. Johnston owns material freehold property interests, which we will
review in order to extract maximum value.


In considering its offer for Johnston, Ennstone evaluated Johnston's pension
scheme in conjunction with its professional advisers. The Ennstone Board
believes that, on the basis of current legislation, the long term cash cost,
given the current investment strategy, is likely to be substantially less than
that disclosed in the most recent Johnston accounts. The disposal of the
engineering division will be structured to minimise any pension impact on the
enlarged Group.
Current Trading

In our recent interim statement we indicated that the UK market remains
competitive. This view has been underlined by other major companies in the
sector. This situation has persisted and extreme weather conditions in Scotland
in August and in the US in September has led to some disruption. Although the
Ennstone Board is cautiously optimistic about the outcome in the fourth quarter,
it is now likely that results for the full year will be marginally below market


The Board believes that the Offer represents an excellent opportunity to
accelerate Ennstone's strategy of expanding its Central England core aggregates
and value added products business and unanimously recommends Ennstone
Shareholders to vote in favour of the acquisition of Johnston.

The Ennstone Directors, accept responsibility for the information contained in
this announcement. To the best of the knowledge and belief of the Ennstone
Directors (who have taken all reasonable care to ensure that such is the case),
such information is in accordance with the facts and does not omit anything
likely to affect the import of such information.This announcement, which is the
sole responsibility of Ennstone, has been approved by Altium Capital solely for
the purpose of Section 21 of the Financial Services and Markets Act 2000.

Altium Capital, which is authorised and regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively for Ennstone as financial
adviser (within the meaning of the Rules of the Financial Services Authority)
and no-one else in connection with the Offer and is not advising any other
person or treating any other person as its client in relation thereto and will
not be responsible to anyone other than Ennstone for providing the protections
afforded to clients of Altium Capital or for providing advice in relation to the
Offer, the contents of this announcement or any other matters referred to

Terms defined in the Offer Document bear the same meanings when used in this


Ennstone plc
Vaughan McLeod                                                    01332 694444

Altium Capital Limited
Phil Adams/Adrian Reed                                           0161 831 9133

College Hill
Mark Garraway/Matthew Gregorowski                                020 7457 2020

                      This information is provided by RNS
            The company news service from the London Stock Exchange

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