Raised eyebrows as management make low ball Osborne & Little bid

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The Independent Online

Osborne & Little, the fabric and wallpaper company whose designs have adorned the walls of Buckingham Palace and The White House, is to be taken private in a management buyout worth £13m.

The Aim-listed group, which reported a collapse into the red yesterday, said the costs of maintaining a listing, together with a limited interest in smaller companies among UK institutions, lay behind the company's decision.

The group is being bought out by the management team including co-founders Sir Peter Osborne, who is chairman and Antony Little, who is now a non-executive.

Backed by HSBC the management is offering 215p cash per share. This is a 30.3 per cent premium to the previous day's closing price of 165p. However, this was a nine-year low for the shares which had sunk after announcing a profits warning in March.

Osborne & Little's shares reached close to 900p in 1997 and stood at 562.5p just a year ago. They closed at the offer price of 215p yesterday. Shareholders may not look kindly on the offer although the company's two founders control just over 50 per cent of the shares, meaning they can de-list the company if they choose.

Commenting on the buy-out proposal, Charles Motley, the company's independent director, said: "The offer gives shareholders an opportunity to realise their investment in the company for cash at a time when market sentiment towards smaller companies is increasingly negative." The group said the lack of liquidity in its shares was an additional problem.

Osborne & Little was founded in 1967 as a designer and maker of wallpaper before branching out into fabrics later. It has typically specialised in ornate, traditional patterns. The group floated on the old Unlisted Securities Market in 1986 and graduated to the main market two years later. In 2001 it dropped down to Aim, the junior market.

The company's designs have been a byword for taste and style, though modern, minimalist fashions mean the business is not as successful as it was. Its patterns have been used to decorate hotels such as The Ritz and The Connaught. A number of American presidents have also been customers. Osborne & Little's lemon silk fabrics were used in private apartments during Bill Clinton's term in office and a beige trellis wallpaper has since hung instead.

But changing tastes have hit the company. Yesterday the group reported pre-tax losses of £139,000 for the year to March on reduced sales of £33m. The company said market conditions had been difficult. Sir Peter Osborne added: "The first three months of the current year show no indication of short-term recovery in the group's two major markets, the UK and the USA."