Hillsdown set for tug of war on pounds 464m bid

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The Independent Online
HILLSDOWN HOLDINGS could become the subject of an auction after US buy-out fund Hicks, Muse, Tate & Furst, yesterday launched a pounds 464m bid for the company.

The cash bid, which values Hillsdown at 127p per share, has been recommended by the company's non-executive directors and has the support of 16 per cent of shareholders. But it could face a competing offer from a UK venture capital company which is considering backing Hillsdown's executive directors in a management buyout. CinVen is one of the venture capital funds that has been looking at Hillsdown, but it is considered unlikely to get involved in an auction. But other venture capital buyers have also been circling the group.

Peter Jacobs, chairman of Hillsdown, said it is in "active discussion" with another buyer. He said the bids would be scrutinised by the independent directors due to a potential conflict of interest with the executive members and the UK bid.

Hillsdown shares closed 4.5p higher at 117p, though the shares did not have the opportunity to react to the Hicks, Muse bid which was announced after the market had closed.

It is understood that Hillsdown's major institutional shareholders, including Phillips & Drew and Prudential, are willing to sell out. Though they support the Hicks, Muse proposals they have not signed irrevocable undertakings to accept the US offer and are hoping an auction will force the exit price higher.

The Hicks, Muse offer would give Hillsdown, whose brands include Typhoo tea and Chivers Hartley jams, an enterprise value of pounds 750m, if its pounds 190m of debt is included.