CVC interrupts Forbo float plan

CVC has approached Forbo International, the Swiss-based flooring company, with a SFr330 pershare offer, or SFr448m, for the company. In response, Forbo’s board told shareholders it could offer more value in the long-term with a rights issue to finance a reorganisation. It has appointed CSFB to do a value analysis.

Forbo announced plans for a SFr200m rights issue to finance a reorganisation and to boost its flooring division as news of CVC’s bid began to percolate. Terms will be released after an EGM on December 2, but based on the stock’s pre-announcement closing price last week of SFr207.50, the issue of about 2m new shares would be on an approximate basis of 3-for-2 and could be priced at around SFr100. That level would be a gross discount of 52% and a discount of 30.1% to the theoretical ex-rights price.

The company’s stock reacted strongly to the announcement of the issue and the news of the interest from CVC, closing at SFr270.50, up 30% on the day. Assuming the issue is approved, the subscription period will be from December 6 to December 14, with the new stock trading from December 15.

Forbo said it was aiming for a sustainable improvement in its business as a result of the cash injection. “Returns are expected to pick up in 2006, with the full effect being felt as from 2007,” the company said in a statement.

CVC has been in acquisitive mood recently. It is in the process of merging BASF Printing Systems with ANI Printing Inks to create an international print supplier worth €830m. In the summer, it partnered with Permira to acquire the Automobile Association through a £1.75bn buyout.