HIT entertains three suitors as £500m auction takes shape

A £500m-plus auction for HIT Entertainment began to take shape last night as the company opened its books to Lions Gate Entertainment, a US media group, and revealed it had received a third unsolicited takeover approach.

A £500m-plus auction for HIT Entertainment began to take shape last night as the company opened its books to Lions Gate Entertainment, a US media group, and revealed it had received a third unsolicited takeover approach.

Lions Gate confirmed it was considering trumping an agreed takeover offer from Apax Partners - an announcement which prompted HIT to admit it had received a third "unsolicited early-stage proposal".

The mystery new suitor is thought to be an industry rival which has teamed up with a private equity house.

HIT's board, which has already backed Apax's £489m cash offer, will meet today to rubber-stamp its decision to open its books for Lions Gate, the company behind Clifford the Big Red Dog and the Care Bears. It will also discuss the new approach.

The company said that while it was "investigating" the fresh approaches, "their preliminary nature means there can be no assurance that they will lead to a further offer for the company".

HIT intends to post the full terms of the recommended offer from Sunshine Acquisition, Apax's bidding vehicle, to its shareholders within the next ten days. But traders have long been betting that rival bidders would emerge for the owner of Bob the Builder ever since Apax launched its 300p-per-share cash offer. HIT's shares, which have spiked above that offer on several occasions, closed on Friday at 299.75p.

In a short statement yesterday, Lions Gate said it had "requested access to due diligence information because it is considering making an offer to acquire HIT". Any bid would need to trump Apax's offer - which will net Peter Orton, HIT's founder and chairman, a £30m windfall - and is likely to be in cash with an equity alternative.

Ideally, Lions Gate would have teamed up with Apax to bid for HIT, but it is understood the company's overtures were rebuffed.