Buxton slams Charter as Melrose walks from bid

What a difference a month makes for Schroders' head of UK equities Richard Buxton.

In August he was no doubt elated after US technology giant Hewlett Packard agreed to snap up one of his Schroder UK Alpha Plus fund's holdings, Autonomy, at a massive premium.

However, this month he is disappointed after Melrose walked way from a bid from another of his core holdings, engineering turnaround firm Charter International, yesterday.

Melrose left the bid table after refusing to be held to ransom after an offer of 910p from US firm Colfax earlier this month, representing a significant premium to Melrose's 850p per share.

In a statement posted to the market yesterday the firm said: 'Melrose announces it has completed due diligence and has agreed terms with its financing banks. However, in the current climate Melrose is of the view it is not in its shareholders' best interests to proceed.'

On paper the Colfax deal looks to be a decent one for Buxton - who according to documents seen by Wealth Manager had a 4.32% stake in the firm on 12 August - given its high premium.

However, Buxton is critical of Charter's short-term attitude and believes Melrose could have realised its long-term potential.  

In a statement this morning Buxton made it clear he had supported the Melrose bid. He said: 'We are disappointed, though not altogether surprised, that Melrose has had to withdraw its potential offer for Charter.

'As long-term shareholders in Charter, we believe there is substantial upside in the company which, in our view, would have been realised over the next three-five years under management by Melrose in a UK listed company. 

'We were supportive of the Melrose offer as we never wished to be 'cashed out' of the long-term potential of the Charter businesses today, but to be able to participate in the future upside under the terms of the Melrose offer.

'In our view it is disappointing that the opportunity was not taken by the Charter board and its advisers to engage with Melrose and, instead, to solicit alternative approaches - to the extent of paying an inducement fee to their preferred US suitor. They may deem this outcome a satisfactory result for shareholders but we regard it as a victory for short-termism and a defeat for shareholders with a long term investment time horizon.'