Chloride rejects bid approach from Emerson of U.S.

By Mike Elliott

LONDON (Reuters) - Britain's Chloride Group Plc, which makes products to protect against power shortages, has rejected a $1.28 billion bid approach from U.S. diversified manufacturer Emerson Electric Co (EMR.N: Quote, Profile, Research).

Chloride, whose shares jumped more than 27 percent, said on Monday it had rejected a preliminary approach over a possible cash offer at 255 pence a share, which would value the company at around 657 million pounds ($1.28 billion), which it said materially undervalued the company.

Chloride stock was 27.4 percent higher at 265p by 1135 GMT on Monday.

Emerson Electric confirmed it had made the approach about a possible cash offer for Chloride on March 18.

"There can be no certainty that an offer for Chloride will be forthcoming," Emerson said in a statement. "A further announcement will be made in due course if appropriate."

Chloride said in its statement the approach was subject to a number of conditions and pre-conditions including due diligence.

"The board of Chloride considered the proposal and concluded that it materially undervalued the company and its prospects. Accordingly, it was not in the interests of Chloride and its shareholders and the board has rejected it," it said.

Investec analyst Chris Dyett, who had named Emerson as a possible bidder earlier on Monday, said any bid was likely to be pitched upwards of 270p a share.