Scapa Group PLC surges on takeover offer from US materials firm

() shares surged on Wednesday following news of a takeover offer from US materials group Schweitzer-Maudit International Inc (NYSE:SWM).

The US firm said it has agreed to acquire the AIM-listed maker of tapes and bandages for 210p per share in cash, an 18.6% premium to its closing price on Tuesday, valuing the entire company at around £403mln.

Schweitzer said it believed Scapa presented “an attractive opportunity to acquire a highly regarded, vertically integrated healthcare and industrial solutions provider with global presence and a blue-chip client base” and that the combination will create an entity with “significant capabilities and scale in the advanced materials segment” as well as a US$250mln healthcare portfolio.

Meanwhile, Scapa’s directors said they believed the offer represented “compelling value” and recommended the proposition to shareholders unanimously, adding that investors representing around 16.7% of the shares have already said they will vote in favour of the combination.

“The Scapa team has worked tirelessly to build our brand to be globally recognised as an innovative, solutions-driven partner for outsourced product development and manufacture. The expansion into healthcare markets, from our initial focus on the industrials space, has significantly broadened our reach and has brought new strategic partnerships, many of which are with blue-chip companies. As another multinational producer for outsourced performance materials, SWM has been on a similar journey to us, also extending into healthcare markets having initially been focused on customers in the industrials sector”, Scapa chief executive Heejae Chae said in a statement.

“We believe the combination of our complementary businesses will bring benefits to all stakeholders. We see these not only resulting from increased scale, but also from an increased ability to cross-sell products across our respective client bases, as well as an increased potential to enhance inorganic growth from within a larger group. We believe the enlarged business will also provide greater career development opportunities for employees”, the CEO added.

Shares in Scapa jumped 24.9% to 221p in early deals, around 5.2% higher than the offer price which may suggest investors think a higher bid could be in the offing.