AGA Rangemaster share price soars, receives competing takeover approach from Whirlpool

British maker of cast-iron cookers Aga Rangemaster announced on Tuesday it has received a takeover approach from a second US company, potentially placing it in the midst of a bidding war.

Aga, whose large cookers are favored by the English middle class and are synonymous with a British country lifestyle, said it has received an approach for a cash offer from Whirlpool Corporation, the worlds biggest appliance maker, but there was no certainty an offer would be received.

This could spark a bidding war between Whirlpool and US competitor Middleby Corporation, which in July made an agreed £129-million ($201 million) takeover offer for Aga. Whirlpool confirmed in a separate statement to the London Stock Exchange it was considering an offer for the British oven maker.

Aga said it would open its books to the new bidder to let it decide whether to launch a formal bid but continued to recommend Middlebys agreed transaction. It added it was in its shareholders best interests to continue to execute the Middleby transaction as planned, given the Whirlpool approachs conditionality and the possibility of a competing offer not being received.

Aga said it would hold talks today with the UKs Takeover Panel to set a deadline by which Whirlpool must announce a clear intention to launch a formal bid or withdraw. The company said that without another firm bid, it would proceed with its sale to Middleby, which is due to be voted at a general shareholder meeting on September 8th. If the deal receives support, the board will enter a binding agreement with Middleby about a week later, which could be delayed if Whirlpool submits an offer.

Agas shares closed at GBX 183.25 on Friday, slightly below Middlebys agreed offer of 185 pence per share. Analysts predict that given the relatively low bid it received in July, Whirlpool might spark a bidding war with a bump of 50 pence on top of Middlebys offer.

Middleby said at the time of the original deal that it planned to keep Agas manufacturing in the UK. The oven maker employs about 2 500 people, with more than 2 000 working at its factories and offices mainly in the UK.

The company has benefited from a strong British housing market and improved consumer sentiment following May’s general election. Sales rose 1.5% to £125 million in the first half of the year but it recorded a pre-tax loss of £4 million due to pension costs and one-off expenses related to the Middleby deal.

AGA Rangemaster Group Plc traded 9.55% higher at GBX 200.75 per share at 09:36 GMT in London, marking a year-on-year jump of 33.61%. The cooker maker is valued at £126.93 million. According to the Financial Times, the 3 analysts offering 12-month price targets for AGA Rangemaster Group Plc have a median target of GBX 185.00, with a high estimate of GBX 200.00 and a low estimate of GBX 125.00. The median estimate represents a 0.95% increase from the last price of GBX 183.25.