Royal Doulton, the British ceramics group, has criticised the recent move by rival Waterford Wedgwood to buy a 14.9 per cent shareholding in the company. The frosty approach adopted by Royal Doulton, whose shares rose 1p sterling to 90p in London yesterday, is now likely to postpone any co-operation between the two companies in the competitive ceramics market.
Waterford Wedgwood announced 10 days ago the purchase of the stake at 90p sterling per share - when they were trading at 78p - at a cost of £11.1 million sterling (€17.6 million) and said it did not plan a full offer for the troubled British company unless one of its rivals made a move.
But after initially adopting a neutral approach to the purchase, Royal Doulton has now complained that no prior notice of the acquisition was given to it. And it sought clarification of Waterford Wedgwood's intentions at a meeting last week.
In a measured statement yesterday, Royal Doulton said: "The taking of a substantial minority stake by a major competitor, when coupled with a stated intention not to make an offer to all shareholders, is unlikely to operate in the best interests of Royal Doulton shareholders."
This view has led the company to commission merchant bankers Lazard "to realise the value of its outstanding brand portfolio and strong positions in major markets to the benefit of all of its shareholders". Caze nove & Co has been appointed joint adviser. A Waterford Wedgwood spokesman said he could not add to the statement made at the time of the share purchase. Mr Hamish Grossart, chairman of Royal Doulton, was not available for comment.
However, it is understood that neither side wants to aggravate relations. While industry sources said the Royal Doulton statement was not intended to be hostile, relations between the two have been described as varying between cordial and cool.
Waterford Wedgwood is understood to have talked about exploring ways of adding value to the two companies, at the meeting between the two sets of senior executives. That meeting, however, led to Royal Doulton's statement.
Lazard is now likely to be exploring all the alternatives open to Royal Doulton, including the possibility of encouraging a `white knight' to buy a controlling stake in the company. That would trigger a counter-bid from Waterford Wedgwood. However, as Waterford Wedgwood has more than 10 per cent of Royal Doulton, a counterbidder could not gain total control unless Waterford Wedgwood were to accept the offer.
Other options likely to be explored are a part-sale of its operations, a strategic link-up with another group or, indeed, co-operation with Waterford Wedgwood.
Royal Doulton recently shocked the market with the disclosure that it had lost £10 million to £12 million in sales representing about 5 per cent of annual turnover, as the introduction of new software systems delayed deliveries by up to 10 weeks. Losses for this year are expected to exceed analysts' forecast of £16 million.
Royal Doulton with annual sales of some £225 million is broadly the same size as Wedgwood, Waterford Wedgwood's subsidiary. It has well-known products such as Royal Crown Derby, Minton, Royal Doulton and Royal Albert. It has three plants in Stoke-on-Trent and one in Indonesia.
