Hillsdown board considers de-merger

HILLSDOWN Holdings, the Hartley jams and Typhoo tea group, yesterday became the latest food company to announce plans that could lead to a break up or de-merger. Alongside flat full year profits of pounds 153m, the company said it has established a board committee to consider the group's structure and report to shareholders at the annual meeting in May.

Analysts expect Hillsdown to de-merge or sell its non-food interests which include Fairview Homes, a housebuilder, and the Christie Tyler furniture business

While some observers said the group could follow Dalgety and break itself up entirely, most analysts said Hillsdown was likely to retain its underperforming foods interests which offer the most room for improvement.

Rival food groups such as Unilever, United Biscuits, Dalgety and Perkins Foods have recently all announced restruc- turing plans or sell-offs.

Hillsdown has been under pressure for years to reduce its collection of disparate businesses and it still has 10 operating companies. Its shares have underperformed the market by more than 30 per cent since the beginning of 1997 and the management, led by George Greener, has said there will be "no holy cows" in the committee's analysis.

Mr Greener said he hoped the businesses might fetch a strategic premium like Dalgety achieved with its Spiller's petfoods operation. Sally Jones, at Credit Lyonnais Laing said this was unlikely: "Who would want to pay a premium for jams, canning and biscuits?"

Analysts said the break-up value of Dalgety could be as high as 200p per share, indicating a value of pounds 1.45bn. This compared to yesterday's closing price of 169p, up 5p.

Hillsdown has already sold a string of businesses in areas such as red meat and leather tanning. Yesterday it announced profits up pounds 3m to pounds 153m on sales of pounds 2.6bn. Furniture and housebuilding improved profits from pounds 41m to pounds 62m. But profits fell in general foods which includes biscuits and jams. Profits in poultry and potatoes also fell. The dividend was held at 7.8p.