Hardinge Asks Shareholders to Reject Romi's Offer

Machine tool manufacturer Hardinge Inc. (Elmira, NY) said its board recommended to shareholders to reject the $90 million unsolicited offer by Brazilian rival Industrias Romi SA, calling it "grossly inadequate and opportunistic." In March, Hardinge had adopted a poison pill with a 20 percent trigger and advised shareholders to defer any action in response to machine tool maker Romi's $8.00 a share tender offer. Poison pill is a tactic adopted by companies to thwart hostile takeovers.

The manufacturer said in a statement that Romi's offer fails to reflect the value of Hardinge's significant industry position, global market presence, and future growth prospects. Hardinge also said the offer values the company at a price below historical valuations and a double digit stock price for its shares is attainable in the medium term if the machine tool industry rebounds.

Here is a brief reverse chronology thus far of Romi?s bid to acquire Hardinge:

Romi offered to buy Hardinge for $8.00 per share in February, saying it had been rebuffed by the U.S. company's management and its board of directors' rejection of Romi's previously announced all-cash offer to acquire all of the outstanding shares of Hardinge. The offer is not subject to any financing condition and will be funded entirely from Romi's internal resources.

?We are disappointed that despite the positive response to our offer from Hardinge shareholders, Hardinge's Board continues to refuse to engage in any meaningful dialogue to discuss our all-cash offer,? said Livaldo Aguiar dos Santos, chief executive officer of Romi. ?Based on Hardinge's fourth-quarter and full-year 2009 results and outlook announced, it is difficult to understand how Hardinge can deliver equivalent or superior value for its shareholders as a stand-alone enterprise in the near- to mid-term. We believe that any objective analysis would clearly confirm that our offer is in the best interests of Hardinge's shareholders, offering them immediate liquidity at superior value.

?While we continue to believe a combination makes sense, we have a responsibility to the shareholders of Romi to remain a disciplined bidder, especially in light of announced Hardinge's earnings. We will study these results, and the long-term trends they reflect, carefully with our advisors. Although it remains our strong preference to sit down with the Hardinge Board to reach a mutually agreeable transaction, unfortunately, Hardinge appears instead to be more focused on erecting further barriers that deny shareholders the value our offer would provide. If necessary, we may have no other alternative but to take our offer directly to Hardinge shareholders,? concluded Mr. dos Santos.

On February 4, 2010, Romi announced that it submitted an offer to Hardinge's Board of Directors to acquire all of the outstanding shares of Hardinge for $8.00 per share in cash. Romi's all-cash offer represents a premium of over 46 percent to Hardinge's closing share price on February 3, 2010, the last trading day prior to the public disclosure of Romi's offer.

Founded in 1930, Industrias Romi SA is the market leader in the Brazilian machinery and equipment industry. The company is listed in the ?Novo Mercado? category, which is reserved for companies with the highest degree of corporate governance on the Bovespa. The company manufactures machine tools, mainly lathes and machining centers, plastic injection and blow molding machines for thermoplastics and parts made of grey, nodular or vermicular cast iron, which are supplied rough or machined. The company's products and services are sold globally and used by a variety of industries, such as the automotive, general consumer goods and industrial and agricultural machinery and equipment industries.

Stay tuned.