Mystery bidder makes £26m cash offer for Whitehead Mann

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The Independent Online

Whitehead Mann is considering a £26m cash offer to take the business private, raising the prospect of a bidding war for the executive recruitment company.

The company has been approached by an individual from within the recruitment sector who has backing from an unnamed private equity company.

Jonathan Baines, chairman of Whitehead Mann, is thought to be involved in the offer to take the company private, alongside Carol Leonard, an executive director. The unnamed individual who has approached the company is keen to work with the existing management.

Whitehead Mann confirmed that it is considering the 42p-a-share cash offer. An independent sub-committee has been established to consider the approach. Deloitte Corporate Finance will advise the committee. Talks are at an advanced stage, with a deal possible within weeks. Sources familiar with the situation dismissed initial speculation that founder Anna Mann, who left the company in 2004, was behind the approach. It also said that chief executive Chris Merry was not involved in the bid at this stage.

Shares in the company closed more than 14 per cent higher at 40p yesterday after the deal was confirmed. The deal is pitched at a slight premium to the 40p price at which the company raised funds last year.

Although the market welcomed a deal to take the company private, the share price rise has not yet factored in the prospect of a rival bid from an industry player.

In 2004, Whitehead Mann held discussions with the large US players Korn/Ferry International and Heidrick & Struggles, but a deal failed to materialise.

Whitehead Mann is considered to be a strong brand in the executive recruitment sector and is one of the largest players in the UK market.

It is currently involved in the search for a new chief executive of the broadcaster ITV. Other bidders could potentially include the US players Spencer Stuart and Russell Reynolds, and its UK rival Imprint.

Whitehead Mann has caught the eye of its rivals after a drastic collapse in its share price from a 325p peak in 2004. After the departure of Ms Mann, the company unveiled a string of profit warnings in 2004 and early 2005 on the back of problems integrating acquisitions. It also pulled the plug on its US operations before raising funds last year.

In the year to March 2006, Whitehead Mann reported a pretax loss of £1.6m on sales of £39m. The loss had narrowed from £19.6m in the year before after the company cut costs by 25 per cent. It also reduced net debt to £4.1m from £10.5m during the year.