RBS Thwarted In Bid To Halt £230m Boiler Deal
The state-backed Royal Bank of Scotland (RBS) has been thwarted in its efforts to block the £230m takeover of Britain's biggest boiler and radiator manufacturer.
Sky News understands that Bregal Capital, an investment firm, struck a deal on Thursday to acquire Ideal Stelrad, a Newcastle-based company following months of negotiations with its owners.
RBS, which is 81%-owned by UK taxpayers, had in recent weeks been trying to prevent Bregal's offer from being accepted, arguing that Ideal Stelrad had not been the subject of a proper marketing process.
The bank is understood to have fallen out with Richard Connell, the manufacturer's chairman, who opposed RBS's view that the company should be broken up and its two operating divisions sold separately.
Bregal required 75% of shareholders to approve the deal and passed the acceptance threshold on Thursday, according to people close to the deal.
RBS holds just over 15% of Ideal Stelrad and has not yet decided whether to push to remain as a shareholder in the company when Bregal becomes its new owner, insiders said.
The bank's hostility to a deal, which should preserve hundreds of British jobs, risked reigniting the row about its role in the UK economy five years after it was rescued by taxpayers.
Ideal Stelrad is one of hundreds of companies in which RBS ended up holding a significant equity stake after the banking crisis and subsequent recession, with these shareholdings apportioned to dedicated teams within the taxpayer-backed bank.
Mr Connell will not retain a role with Ideal Stelrad after the deal completes although the rest of its management team will remain in place.
In buying Ideal Stelrad, Bregal becomes the third private equity firm to own the manufacturer in less than a decade.
Previously called Caradon Plumbing, the company was acquired by Montagu, formerly HSBC's buyout division, for £496m in 2000. The new owners decided to break up the business, selling Twyford Bathrooms for £85m and Mira Showers for £301m, and selling the rump of the group to Warburg Pincus for £227m in 2005.
That investment went awry after Warburg Pincus refinanced Ideal Stelrad at the height of the debt boom in 2007. The company then breached its borrowing agreements and underwent a financial restructuring that culminated in a debt-for-equity swap.
People close to Thursday's deal said that Warburg Pincus had finally agreed to vote its 2% stake in favour of the Bregal deal. Bank of Ireland, which had also been holding out, has also consented to the takeover, they added.
The current auction was run by BNP Paribas, another of the lenders which became an Ideal Stelrad shareholder. Among the other investors were understood to be HSBC, GSO, a division of the giant US investment firm Blackstone, and National Australia Bank.
Bregal is a private equity firm whose investors include the billionaire Brenninkmeijer family, founders of the high street retailer C&A. Its investments in the UK include the fast-growing education company Cognita, and Zephyr, a wind-power generator.
BNP and Bregal were both unavailable for comment.