Hamleys withdraws support for Baugur-led takeover bid

The bidding war for Hamleys, the toy store owner, intensified yesterday when the board withdrew its support for the management team's and the Baugur Group's £52.2m offer from after it was trumped last week by Tim Waterstone, founder of the Waterstone's book chain and owner of Daisy & Tom children's stores.

Mr Waterstone, who is being backed by the private equity firm Rhone Capital, made his 230p per share offer on Friday. The offer placed by Soldier - the takeover vehicle formed by Baugur and Hamleys' management team's - amounted to 226p per share.

Soldier yesterday said it was considering its position in the light of the Waterstone bid and may well move to increase its offer once more. "Everyone will want to see what Baugur's next move will be," Simon Burke, Hamley's chairman, said adding that he advised shareholders to "take no action" regarding either offer. "The independent directors intend to hold further discussions with the parties interested in acquiring Hamleys with a view to formulating their advice to shareholders."

Yesterday it also emerged that Mr Waterstone has now taken a 13.5 per cent stake in Hamleys and questions were raised by the Baugur camp as to how this holding was achieved so quickly and whether some of the share purchases made by the Waterstone camp should have been declared earlier.

Soldier is not likely to make a new bid until it has seen the offer document from Mr Waterstone's team. It yesterday said it had acceptances from around 0.7 per cent of shareholders, and owned no shares itself before making the offer.

Shares in Hamleys yesterday closed up 0.21 per cent at 232.5p, giving it a market capitalisation of £53m. This indicates that the market believes a higher bid will be forthcoming.

Soldier's offer had been intended as a knock-out bid for Hamleys, and was raised from 205p a share only hours before Mr Waterstone came forward with his offer on Friday.