Hillsdown counters rumours after pounds 1.6bn bid talks collapse

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The Independent Online
HILLSDOWN Holdings, the foods-to-housebuilding group, yesterday sought to counter speculation that its business performance was poor by announcing that operating profits for the first four months of the year were "broadly in line with those for the similar period in 1997".

Hillsdown's statement followed Friday's surprise decision by Unigate, the UK's second largest dairy producer, to pull out of pounds 1.6bn takeover talks with Hillsdown because of "differences" over Hillsdown's future prospects.

Hillsdown, the maker of Chivers jam and Typhoo tea, announced earlier this month that it will sell or spin off one-third of its businesses to lift slowing profit growth. The group said that its internal forecasts for 1998 show profits consistent with market expectations. It said it made the comments "as a result of certain comments in the press and to counter speculation".

The speculation was that Unigate had decided to withdraw because it could not support Hillsdown's view of their own prospects after being shown certain information about trading at Hillsdown.

The company's poultry division was hit by the strength of the pound which cut export revenue, although performance will likely improve in the second half, it said. The furniture and housebuilding divisions, which the company plans to shed, are performing strongly, it said.

The first four months of the year account for about 15 to 20 per cent of profit, Hillsdown said. "Current internal forecasts" show pre-tax profit for the year ending 31 December to be "consistent with market expectations," Hillsdown said.

Merrill Lynch said it had reversed its downgrade published on Friday following the termination of talks between Unigate and Hillsdown .

The investment bank said it expected Unigate stock to recover some of the 10 per cent it has lost since speculation of a bid for Hillsdown emerged.

Hillsdown shares closed down 2.5p at 180.5p. Unigate shares fell 0.5p to 664.5p.