The board of Hewetson, a publicly quoted British floor products group, has unanimously recommended its shareholders to accept the 200p sterling per share cash offer from Kingspan Group. The offer represents an 8 per cent premium over the price prior to the announcement and values the British company at £37.1 million sterling. There is also a loan note alternative.

Hewetson manufactures and distributes a range of products primarily to the construction industry. Its main business is in raised access floors in which it is said to be the UK market leader. It also produces a range of timber windows, staircases and timber panel components and cement flooring products. Hewetson operates from 11 sites, employing more than 500 people.

It increased its profit before tax from £2.5 million sterling to £5.1 million in the year to March 31st 1998. Sales grew less strongly, from £61.6 million to £69.6 million. Growth has continued this year with interim results showing a 37 per cent rise in operating profit, on a continuing basis, to £2.6 million. The offer is on a 7.3 times multiple on historic profits. Also, it is on a substantial premium to the net assets of £9.5 million last year, which will create a substantial goodwill item.

Kingspan said that since its acquisition of the Ward business from Rugby Group in January 1997, it has established itself as a leading provider of building components to the UK building products business. The latest acquisition, it added, gives it a significant addition to its product portfolio. Hewetson has noted that while its shares have outperformed the building materials sector over the past five years, current share valuations across the sector remain low.

"Furthermore, in view of the current economic uncertainty and continuing under-performance of small company share prices", the Hewetson directors believe it is unlikely that their shares will trade at a premium to the offer price in the foreseeable future.