Britain's Chloride rejects takeover bid

Britain's Chloride, 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 compoany said

Chloride did not name its suitor but St. Louis-based Emerson Electric later revealed it was the bidder, saying it made its first approach to the board of the British company on March 18.

Emerson added that it has provided no "firm intention to make an offer," adding it would make a further announcement "in due course if appropriate."

Even with that qualification, investors' expectations that the price will go higher spurred the shares to a two-decade high. The stock closed at 280 pence ($5.49).

ABN Amro analyst Sue 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).

Chloride is an "excellently managed business in a fast growing, business-critical area," she said.

"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."

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