Burlington Biscuits, the US contender comprising Hicks, Muse, Tate & Furst, the specialist buyout firm, and Nabisco, the food giant, announced that it had acquired a total of 29.9 per cent of UB's share capital from institutional investors, including Phillips & Drew, Prudential and Mercury Asset Management. The highest price at which it bought shares was 254p, obliging it, under the City Takeover Code, to raise its offer for the group to at least that level. Burlington said it would "shortly increase its cash offer to not less than 254p a share", valuing UB at about pounds 1.2bn.
Michael Landymore, an analyst at Investec Henderson Crosthwaite, said: "So far, it's two-nil to the Americans. The other side seem to have been caught off guard."
Finalrealm, the rival consortium led by Paribas Affaires Industrielles, the venture capital arm of France's BNP-Paribas, has yet to make a bid but said it was "actively considering whether to make a higher cash offer". Finalrealm urged UB shareholders to "take no action at this stage". A further announcement is expected today.
Burlington learnt late on Tuesday night that Finalrealm intended to present a counter-offer to the UB board. John Muse, Hicks's co-founder who heads the group's European operations, and Jim Kilts, chief executive of Nabisco, spent much of the night putting in place additional financing to enable Burlington to raise its own offer.
Finalrealm is understood to have met with the UB board yesterday morning. But its offer, the level of which was not confirmed, was "not sufficient to get the recommendation of the board", according to a source familiar with the negotiations.
UB employs 22,500 people worldwide, including 19,000 in the UK who are based at the group's head office in West Drayton, west London and at factories and plants at Ashby-de-la-Zouch in Leicestershire, Consett in Co Durham, Rotherham in South Yorkshire, Teesside, Halifax, Carlisle, Cumbria and Manchester.
Under the Burlington proposal, UB would be merged with some of Hicks' and Nabisco's European operations. The Paribas group is expected to sell about 20 per cent of UB's assets to Danone if it wins.
UB shares, which have underperformed the UK market by 64 per cent in the past five years, yesterday closed up 5.5p at 260p.