In a letter urging shareholders to accept Hanson's pounds 780m bid for RHM, Lord Hanson, chairman, says he wants RHM 'to become one of Hanson's major companies; to be developed and expanded as a strong international food business'.
Hanson is keen to establish another core business in Britain as its ability to expand its existing interests - principally cigarettes and building products, where it has large market shares - is constrained by potential problems with the Monopolies and Mergers Commission. It claims in its offer document that it has the 'management skills and financial strength necessary to restore (RHM's) fortunes as a strong international food business'.
But Stanley Metcalfe, RHM's chairman, said the demerger proposals were 'to ensure that RHM's existing shareholders, rather than an opportunistic predator like Hanson, benefit from the value in the constituent parts of the RHM Group'.
RHM's shares closed 2p higher at 249p, 29p above the bid price, while Hanson's closed up 1p at 233p.
Hanson warns shareholders that the demerger into three companies, proposed by RHM last week, would take months to complete and 'is by no means certain . . . to bring greater shareholder value'. It 'ignores the fundamental problems faced by (the three) businesses'.
In baking and milling, it claims that RHM has lost market share, despite investing pounds 115m in the past three years, and has 'failed to prevent the deterioration in its margins'. It accuses RHM of failing to capitalise on the potential of brands such as Sharwoods and Bisto in its grocery and speciality products division, while in the baking division, Mr Kipling has suffered falling margins and market share.
The document also attacks RHM's 'half baked expansion plans', saying it has failed to achieve its aim of developing in Europe. It points out that about pounds 518m was spent on acquisitions between 1987 and 1991 - including pounds 283m for Avana and pounds 80m for Nabisco's breakfast cereal business. The cereal business has now been sold and six out of Avana's 10 divisions have been disposed of.