Schroders ignites public row with criticism of Charter deal

A major shareholder row erupted today over one of the biggest takeovers of the year, when fund manager Schroders took the rare step of issuing a stock exchange statement to publicly condemn engineer Charter's board.

Schroders said Charter's preference for the £1.5 billion cash bid from US giant Colfax over British rival Melrose's cash-and-shares approach was a "victory for short-termism and a defeat for shareholders".

Melrose officially withdrew from the three-month takeover battle yesterday. Chief executive David Roper said: "We decided it would be better to walk away on the front foot, with our head held high."

Schroders, one of the City's biggest names as well as Charter's second-largest shareholder, said it "never wished to be cashed out of the long-term potential of the Charter businesses, but to be able to participate in the future upside under the terms of the Melrose offer." Aviva, which like Schroders owns 8% of the business, had the same view.

Schroders also took the highly unusual move today of singling out Charter's advisers, who are Goldman Sachs, JP Morgan Cazenove and RBS, for criticism for organising an "inducement fee" between Charter and Colfax. The British company agreed to pay its favoured suitor £15 million if shareholders backed another bidder - a deal organised just days before the Takeover Panel prohibited such arrangements under its new mergers and acquisitions rules.