Hillsdown rejects pounds 1.5bn offer from Unigate

A BIDDING war could break out for the various parts of the Hillsdown Holdings food conglomerate after it emerged that Unigate has had a pounds 1.5bn offer for the group rejected.

Unigate, the milk and fresh food business with a cash pile of pounds 280m, made the offer at the beginning of the year in an attempt to pre-empt the individual sale of Hillsdown's businesses, which are being demerged into three different quoted companies.

Unigate is interested in the chilled foods business, which is a big supplier of ready-made meals to Marks & Spencer. It would have sold off unwanted parts such as Hillsdown's furniture and housebuilding operations, which have been the subject of interest from trade and financial buyers.

However, analysts say rival offers for the food operations could come in from companies such as Northern Foods, Geest and Danone, the French foods company.

Depending of the movement in Hillsdown's share price this morning, the company may be forced to make a statement about the offer to the Stock Exchange.

It is possible that Unigate could come back with a higher offer for the whole of Hillsdown. This would have to be a significant increase on the previous bid as Hillsdown is currently valued at pounds 1.35bn as of Friday's closing price of 185.5p. However, it is more likely to make an offer for the chilled foods business, which is considered the jewel in Hillsdown's crown.

Unigate has sufficient cash resources to finance an offer. Meanwhile, it is possible Unigate would spin-off its dairy operations into a separate company, or merge them with Express Dairies, the recently demerged milk operation of Northern Foods.