Berisford buy-back on ice after bid approach

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The Independent Online
Berisford, the Magnet kitchens and Welbilt food equipment company, postponed plans for a share buy-back yesterday after it said it had received an approach that may lead to an offer.

Berisford shares soared 30.5p to 151.5p on the news, valuing the company at pounds 230m as the City cast around for the likely bidder. Wassall, the industrial holdings group is considered a possibility, along with a string of American bidders attracted by the group's heavy tax losses in the US. Wassall declined to comment as its shares fell 2p to 284.5p. Some dealers also mentioned Electrolux which was outbid by Berisford for Welbilt.

A bid for Berisford would mark a sorry end for what was once one of the market's glamour stocks. Since Alan Bowkett came on board as chief executive in 1992, the City has subscribed to more than pounds 400m in rights issues as the City backed his judgement.

Berisford received the bid approach during the past week, after it said it planned to return most of its pounds 110m cash pile to shareholders. Jonathan Findler, finance director, said no direct discussions had yet been held but declined to say whether any were planned.

"Whilst this interest has only been of a preliminary nature such that it is unclear whether or not it may lead to an offer being made, the board has been advised that it is impracticable to launch the stock repurchase programme," the company said.

Charles Pick, an analyst at Panmure Gordon, said a bid may need to be pitched at more than 200p a share. Others suggested a break-up value of around 175p.

The potential bidder has struck at an opportune time as Berisford's shares have been weakened by problems in both its businesses.

The Magnet kitchens business was hit by poor trading and an expensive strike at its Darlington factory. The shares fell again in September following a profits warning caused by a slowdown in orders at Welbilt which supplies catering equipment to fast food outlets in the United States. Teething problems with a new computer system added to the woes.

Bid talk overshadowed Berisford's full-year results yesterday which showed pre-tax profits down from pounds 26.8m to pounds 25.5m in the year to 28 September.

Profits at Magnet plunged from pounds 10m to pounds 4m, hit by pounds 3.5m of costs related to the strike as well as a weak housing market.

Welbilt reported profits of pounds 38m compared with pounds 28m the previous year. New management is in place in the US and the computer system is now running effectively.

The company has scaled back its growth forecasts in line with fresh data on the US fast food market. Current trading was more optimistic in both businesses.

In the first seven weeks of the current financial year, Magnet sales are 11 per cent higher. Welbilt's sales are 1 per cent higher though orders are 8 per cent up. Berisford shares have had an appalling year falling from a high of 220p in June. They reached a low of 103p earlier this month.