The pounds 56m price of the deal compares with pounds 629m paid by management when Magnet was taken private in 1989.
The deal quickly turned sour as the housing market collapsed. In the year to March 1989 it made pounds 45.9m profit before tax compared with a forecast of pounds 72.7m, and since then it has lost more than pounds 20m a year.
Because the deal went wrong so quickly the company established for the takeover - which had all the debt - was never merged with the trading company, leaving the banks' lending unsecured. The banks, led by Bankers Trust, wrote off the pounds 562m debt from the deal in 1992 when Magnet's holding company was put into receivership.
Tom Duxbury, who led the deal, left less than a year later to be replaced by John Foulkes. He will step down as chairman when the deal is completed, although he will remain on the Berisford board as a non-executive director. He has already been paid pounds 3m in bonuses and is likely to pick up half his pounds 200,000 salary as notice.
Berisford also has a chequered history. It was forced to sell British Sugar, its main asset, after it was laid low by a number of property deals. Alan Bowkett, chief executive, has dismantled most of its activities and has been looking for a new business to inject into the shell. Last year a bid to acquire C&J Clark, the shoe company, failed.
Mr Bowkett said that Magnet fitted the group's aim of finding a business with a large end market, low-technology products, long-term growth potential and the opportunity to boost profits through cost savings. He added that the acquisition was the first stage in his strategy of building a conglomerate.
'The first task is to sort out Magnet's operations,' he said. 'The second is to continue the liquidation of the old Berisford assets to generate cash. I expect before the September 1995 year-end the cash generated from the two companies will give us the opportunity to look for an acquisition in the US.'
Magnet's net assets are pounds 138m, including pounds 30m cash. It broke even in the six months to September on sales of pounds 90m. Berisford is financing the deal through a one-for-two rights issue at 120p. Its shares were suspended at 128p yesterday until shareholders approve the deal.
Jeffrey Evans, of Bankers Trust, said: 'We feel this is the right market price. The banks have worked alongside Magnet for four years, putting it into its present position. We decided some time ago we would like to sell the company.'
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