The reason for the suspension of trading of Farnell Electronics Plc in London on Monday became clear yesterday when the company announced that it was merging one of its US units with Premier Industrial Corp of Cleveland, Ohio and that the parent would be renamed Premier Farnell Plc, creating the world’s third largest electronics distributor with combined sales of more than $1,600m. The transaction, unanimously approved by the boards of both companies, is valued at some $2,800m, $34.00 per Premier share, half in cash, the other half in a combination of Farnell ordinary shares and new $1.35 cumulative, convertible preference shares. Farnell will seek a listing on the New York Stock Exchange for the American Depository Receipts representing the new shares. The three founders of Premier and others agreed to vote shares representing 54% of the total out. Financing in place and planned includes proceeds of a new loan facility with National Westminster Bank Plc, a nine-for-19 rights issue at 540 pence a share, and cash in hand. The world headquarters of Premier Farnell Plc will be in Wetherby, West Yorkshire. Farnell will be seeking to divest some non-core units in the US firm’s industrial and maintenance products division after the deal has been completed. The words rights issue cast their evil spell, and shares in Farnell tumbled 62 pence to 617p after trading in the shares resumed.
