Britain's Chloride rejects $1.3B takeover bid

The British company, which specializes in maintaining uninterrupted power to information technology systems, said that the preliminary approach of an all-cash offer of 255 pence ($4.99) per share for a total of 657 million pounds "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."

The stock was trading just above that level at 255.5 pence ($5.00) by midmorning on Monday.

ABN Amro analyst Sue Cox said that Chloride is an "excellently managed business in a fast growing, business-critical area."

Cox said that recent deals in the sector, such as Schneider Electric's $6.1 billion purchase of American Power Conversion Corp. in 2006, indicated that a bidder for Chloride would have to pay at least 288 pence ($5.64).

"We have long talked of Chloride as being a potential bid candidate," Cox said in a note. "Anyone wanting to bid for this jewel of a company will have to pay up."

Analysts said that potential bidders include U.S. peers Emerson Electric Co. and Eaton Corp. and France's Schneider Electric SA.

Chloride's customers include banks HSBC Holdings PLC and Barclays PLC, retailers J Sainsbury PLC and Ikea and energy companies BP PLC and Total SA.

Chloride said it believes it has "a robust business model, clear strategy and strong positions in geographies and higher growth market sectors -including IT services, data centers, energy and oil and gas -where secure power is increasingly critical to business continuity."