Hillsdown expected to back offer

Click to follow
The Independent Online
THE BOARD of Hillsdown Holdings, the food conglomerate, is expected to back a revised 217p per share offer from Unigate valuing the company at pounds 1.6bn.

The Hillsdown board met yesterday afternoon to discuss the offer. It is likely to recommend the deal to shareholders assuming the structure of the deal is deemed acceptable. An announcement is expected today.

It is understood that the Hillsdown board, led by George Greener, took the view that while it might be possible to squeeze a little more value from a break-up of the group, this represented a more risky approach and would have taken much longer.

The management teams of both companies were locked in meetings with their advisers last night, hammering out the finer points of the deal such as the cash and shares component.

Hillsdown shares rose 8p to 206.5p yesterday, valuing the business at pounds 1.5bn. Unigate shares dipped 16p to 636.5p.

A deal would render Hilldsown's plans to break itself up unnecessary. Three weeks ago it announced plans that would have left shareholders with shares in three companies. The chilled foods and housebuilding arms would have been floated off and the furniture business sold.

Unigate is principally interested in the chilled foods business which supplies ready meals to Marks & Spencer.

It will sell the housebuilding and furniture division, which analysts suggest could fetch a combined total of pounds 500m. It would keep the ambient foods division, which includes Typhoo tea and Chivers jam in the short term but may sell it on once profits have been improved.

Hillsdown represents a big deal for Unigate as the two businesses are almost the same size. However Unigate has a cash pile of nearly pounds 200m and its management, led by chief executive, Sir Ross Buckland is highly regarded.