Yet another Northern Ireland publicly quoted company is about to bite the dust, by losing its share quotation. But this time, the shareholders will be tempted to breath a sigh of relief as they are being offered a premium for their shares. If they don't accept, their company, Powerscreen International, the recuperating engineering group, will have to pay the bidder, Terex Corporation, a US engineering company, £975,000 (€1.2 million), in compensation.

The directors of Powerscreen have recommended their 11,000 shareholders accept the £181.2 million sterling (€279 million), or 195p per share sterling (302 cents) offer, from Terex. They justify this by noting that the offer price represents a premium of some 13.7 per cent over the closing middle market price of 171.5p, on June 14th, the day before the announcement of the offer. In addition, it represents a premium of some 85.7 per cent over the market price of 105p, the day before the announcement by Powerscreen that an approach had been made which might lead to an offer. True, and using those figures, the offer seems fair enough. However, since then the company announced preliminary figures which showed a strong recovery. Indeed, the preliminary statement even manages to mildly enthuse about the future.

"The current year has started strongly with order books and cash generation ahead of expectations," according to group finance director, Mr John Kennerley. "The group is undertaking a number of profit enhancement projects which should improve financial performance." Terex's chief executive officer, Mr Ronald DeFeo, said "the offer represents hard-fought negotiations but a strong and fair value . . . we look at Powerscreen as an opportunity to extend our product line . . . the financial issue was secondary".

If the "financial issue was secondary" why then did Powerscreen not get a higher bid? The reality is that Terex has driven a hard bargain. Not only will the deal enhance its earnings, but it can expect to see some substantial integration benefits as well. And what are Powerscreen's shareholders getting?

Surprisingly, they are not even getting a dividend. But if the offer lapses, or is withdrawn, it promises to pay a special interim dividend of 2.5p per share, on or before September 30th 1999.

So the offer price is not really 195p. Instead it is effectively 192.5p, and that changes downwards the cited percentages. Trying to establish a projected profit multiple, on the bid price, is not straightforward as Powerscreen has not made any profit forecasts for this year. But the latest figures - produced at the same time as the recommended offer from Terex - indicate that Powerscreen has made a strong recovery, and the omens appear brighter. A year ago the shareholders must have wondered if their shares would ever rise again. Then they were staring at a pre-tax loss of £47.4 million sterling following accounting irregularities which led to an investigation by Britain's Serious Fraud Office. A glimmer of light emerged when a new management team headed by Mr Brian Kearney was installed to replace chief executive, Mr Shay McKeown, and finance director, Mr Barry Cosgrove.

The fruits of their rationalisation programme was reflected in the latest figures which showed a pre-tax profit of £38 million. The results were boosted by a profit of u £16 million on the disposal of subsidiaries. Equally significantly, the gearing fell from 250 per cent to 7.7 per cent.

Based on these figures, the exit p/e of the offer price is 7.6. If growth continues, as expected, the prospective p/e could fall to below 7. No one would expect the institutional shareholders who paid out 625p sterling per share in a placing to remotely recoup what they paid - they have had to write off hefty losses - but the prospective p/e must be considered niggardly.

The only good thing that can be said about Terex's offer is that it removes the uncertainty that has enveloped Powerscreen by providing the shareholders with a firm cash offer. The new management team which is understood to be entitled to receive payments in the event of a takeover has performed a Herculean task in transforming the group, in such a short period.