Brands Hatch agrees to pounds 120m offer

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INTERPUBLIC, the world's second-largest advertising company, yesterday announced an agreed all-paper offer for Brands Hatch Leisure, valuing the motor-racing operator at about pounds 120m.

It is understood that the US group's interest in the Kent-based company was boosted after it secured a six-year contract to stage the British Formula One Grand Prix from 2002.

Robert Bain, group finance director at Brands Hatch, said: "They valued [Brands Hatch] on the basis of what we can do at the moment. We have the contract for the Grand Prix ... that's one of our assets."

The tie-up may invite scrutiny from the Stock Exchange. Brands Hatch shares surged ahead of its 22 October announcement that it was in talks with a potential bidder. Interpublic said it would merge Brands Hatch with its fledgling Octagon Motorsports, a sports-marketing unit which runs the Superbike World Championship.

Frank Lowe, chairman and chief executive at Octagon, said: "The success of Superbike has reinforced our belief that motorsport is one of the fastest growing areas of sport."

The transaction marks a dramatic step forward for Nicola Foulston, Brands Hatch's chief executive, who oversaw its flotation in late 1996. She has backed the tie-up with the 29 per cent of the company held by her family trust and will join Octagon's board.

Interpublic, capitalised at about $11bn, owns advertising agencies McKann- Erickson Worldwide and The Lowe Group. Octagon was formed in 1997 after Interpublic bought out sports-marketing companies Advantage International and API. Under terms of the deal, Brands Hatch shareholders will receive 22.67 Interpublic shares for every 100 Brands Hatch shares that they hold.

"Our vision has long been to the leading international events promoter and venue manager in world motorsports," Ms Foulston said. "To achieve this we need to expand operations from our UK base around the world."

The offer was made at a 15 per cent premium to the Brands Hatch closing price on 21 October, the day before it admitted that talks were under way. The shares, which closed yesterday 21.5p stronger at 515p, fetched 380p less than two months ago.

Brands Hatch has committed pounds 20m to upgrade the track and facilities at its lead circuit to meet the standards required to host a Grand Prix. The company is mid-way through the consultation stage with Kent authorities to secure planning permission for the expansion.

Brands Hatch owns additional circuits at Snetterton, Cadwell Park, and Oulton Park and complements its motor-racing operations with racing schools and corporate entertainment days.