LONDON (AFP) - Two of the world's leading chinaware manufacturers, Waterford Wedgwood and Royal Doulton, said they were close to agreeing on a merger, as the British ceramics industry battles to survive.
The boards of the two firms are in "advanced discussions" over a recommended offer by Waterford Wedgwood for Royal Doulton -- based in the pottery heartland of Stoke-on-Trent, central England -- Irish-based Waterford said.
The offer is expected to be 12 pence in cash per Royal Doulton share, valuing the firm at about 40 million pounds (58 million euros, 73 million dollars).
Waterford, which bought the British pottery company Wedgwood in 1986, already holds 21.2 percent of Royal Doulton shares.
The price of shares in the target surged by 31 percent to 11.00 pence in late trading here. But Waterford stock plunged by 33 percent to 0.087 euros in Dublin after the company said it would issue new shares to fund the bid.
Both companies have seen their bottom lines sink into the red as they struggle to compete against low-cost rivals in Asia and elsewhere, with a weaker dollar cutting into revenues from the key US market.
"The past three years have been turbulent and we would not deny that the financial performance of the company continues to disappoint us all," said Waterford Wedgwood chairman Anthony O'Reilly, a leading Irish businessman.
"Although the current environment remains challenging, in the past six months we have made many changes and put in place some important foundations for future growth."
He said a takeover of Royal Doulton would transform Wedgwood.
"The benefits of such a deal are immediately apparent. With Royal Doulton's restructuring largely completed, we could add Royal Doulton's revenues to our top-line sales without greatly increasing our costs. This would increase the profitability of the combined businesses."
Waterford announced last month plans to cut the working hours for 1,400 staff at its two Irish glassware manufacturing plants, in an effort to return to profitability.
In June, Waterford Wedgwood announced it was undertaking a "root-and-branch review of the business", as it reported a net loss of 49 million euros (62 million dollars) in the year to March.
Half of the company sales are in the US and it has been hit by the weakness of the dollar.
Royal Doulton meanwhile made a pre-tax loss of five million pounds in 2003, albeit down 80 percent from 2002.
The group announced in March that it would shut its Nile Street factory in Stoke-on-Trent by mid-2005 after staged redundancies affecting 525 workers.
Waterford said it was planning a sale of new shares to existing shareholders to raise 100 million euros to fund the bid.
The rights issue of three shares for every five already held will be offered at a price of 0.06 euros per share, represents a 53.8 percent discount to Wednesday's closing price.
Waterford also reported a five percent fall in half-year sales to 356 million euros.
10-21-2004, 18h25