-- Invensys shares fall 17%
-- Ends takeover discussions with Emerson Electric
-- Third-party talks with unnamed companies for parts of the group also ended
-- Invesnys declines to comment on interested companies named in report Wednesday
-- Combination with Emerson is a good fit, analyst says
(Rewrites, adding executive comment, analyst comment, detail.)
By Simon Zekaria
LONDON--Shares in Invensys PLC (ISYS.LN) plummeted Thursday after the U.K.-based maker of rail signaling and industrial automation systems said it had rejected a takeover approach from U.S. industrial conglomerate Emerson Electric Co. (EMR).
It said it ended talks with Emerson following a "highly preliminary" approach and that there are no other discussions taking place in relation to an offer for the whole group. Invensys said it had also been in "highly preliminary discussions" with third parties for parts of the group, but they have also ended.
The company, which makes rail signallng systems as well as controls for nuclear reactors, industrial plants and domestic appliances, said it "regularly assesses the value of its portfolio of businesses" both as part of its "strategic planning process and in response to expressions of interest in relation to certain parts of the group".
A report Wednesday said Emerson is mainly interested in Invensys's Foxboro unit, which makes meters and control systems, and not the British company's rail unit, although Emerson could consider a deal for the whole of Invensys to get control of Foxboro.
Advisers to Invensys have spoken to companies including Siemens AG (SI) and General Electric Co. (GE) about a sale of some or all of its businesses since Emerson's approach, the Bloomberg report said, citing people familiar with the situation. Invensys Thursday declined to comment.
At 0727 GMT, Invensys shares were down 42 pence, or 16.3%, to 214.5 pence. The shares soared almost 30% in intra-day trading Wednesday on the bid talk.
UBS analysts said Emerson, which also specializes in power technologies and electric motors, would fit well given its strengths in field automation versus Invensys in safety systems.
"Long suffering shareholders would probably want an offer near to 300 pence in our view, as it would allow Invensys to reverse its market underperformance," the broker said.
Invensys has previously undergone restructuring to cut costs amid a poor trading performance and debt liabilities. Chairman Nigel Rudd promoted Wayne Edmunds, previously chief financial officer, as chief executive in March last year, replacing Ulf Henriksson.
Write to Simon Zekaria at email@example.com