Shares in luxury goods group Waterford Wedgwood tumbled over 32% in Dublin today after it issued a profits warning and said it was in 'advanced' talks about a possible cash offer for chinaware maker Royal Doulton.
Waterford also announced plans for a rights issue of around €100m to cover the cost of the proposed acquisition.
In a statement ahead of its AGM in Dublin, the company said Waterford had completed due diligence to its satisfaction, but 'certain other matters' still had to be resolved. Subject to these being settled, Waterford said the Royal Doulton board intended to recommend the offer, which was expected to be for 12p per share.
Waterford already holds a 21.6% stake in the British company. In addition, chairman Dr Tony O'Reilly and deputy chairman Peter Goulandris between them hold a further 4%, which would be bought in any offer.
The rights issue, subject to shareholder approval, would be on the basis of five new shares for every three held by shareholders at six cent per share. The company says the issue is fully underwritten by Dr O'Reilly, Mr Goulandris and Davy Stockbrokers.
In a trading update, Waterford said sales for the six months to the end of September were disappointing at €356m, an underlying drop of 5%. It said that as a result pre-tax profits would be 'significantly below' market expectations.
Speaking at the AGM, Dr O'Reilly said the performance 'continues to disappoint us all', but he said the Royal Doulton deal would transform the company, as it could add its revenues without greatly increasing costs.
Chief executive Redmond O'Donoghue said the investment made in Waterford's manufacturing plants would enable it to integrate Royal Doulton with minimal disruption.
Waterford also announced that it had restructured its debt, with a new arrangement that was less restrictive and offered greater flexibility.
Shares in the company closed over 32% lower at nine cent in Dublin this evening.
* Waterford Wedgwood also announced today that Lewis Glucksman is retiring from the board with immediate effect.
