Banks circle over Dalgety

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The Independent Online
As many as six merchant banks have compiled break-up plans for Dalgety, the beleaguered Felix and Winalot pet food company whose shares have been hit by two profits warnings in three months.

ING Barings has compiled a "book" on the company and is understood to be talking to rival food groups about a pounds 900m break-up bid. Other banks have prepared similar documents and have been hawking them around the food sector, trying to garner support.

Barings has not approached the company yet and Lazards, Dalgety's financial adviser, has discouraged the group's chief executive, Richard Clothier, and its chairman, Sir Denys Henderson, from talking to the bank.

Barings is understood to have approached several large food groups such as Nestle, Associated British Foods and Ralston Purina of the United States to see if they would be interested in buying all or part of the group. Several brokers have issued circulars placing a break-up bid of 350p per share on the group, which would value it at pounds 1bn. Dalgety's shares rose sharply yesterday on news of a possible bid approach, closing 16p higher at 266.5p.

One analyst said: "It wouldn't surprise me if the banks were circling. Dalgety has been a takeover target for two or three years and I would have thought every investment bank is looking at it." However, the analyst suggested it would be unlikely for any food group to be interested in the whole of Dalgety, which spans pet food, food ingredients, distribution and a pig meat company: "They've got some good assets but it would not be simple to sort out."

Dalgety has been expecting a bid and has been preparing its defence in conjunction with Lazards and its broker, Cazenove.