Sara Lee ditches bid for Matthews

Sara Lee, the US underwear-to-cakes company, yesterday said it had withdrawn its interest in mounting a rival offer for Bernard Matthews, the "bootiful" turkey company, which is being taken private by management and family members.

Sara Lee, the US underwear-to-cakes company, yesterday said it had withdrawn its interest in mounting a rival offer for Bernard Matthews, the "bootiful" turkey company, which is being taken private by management and family members.

In a statement, Sara Lee said its decision had been made "after careful consideration of the ... offer document from Bernard Matthews Holdings [the family's bidding vehicle]". It is understood the US group abandoned its plans for a counter-offer, aimed at trumping the family's 185p-a-share bid, after learning late on Friday that an irrevocable undertaking, which had been pledged to the Matthews family by Royal & SunAlliance, was more binding than had been thought.

A Sara Lee spokesman said: "Sara Lee has accepted Bernard's determination to keep control ... and that he commands a strong enough shareholding to block out any bidders."

Bernard Matthews, the meat producer's eponymous founder and chairman, was "indisposed" yesterday and unavailable for comment. But David Joll, managing director, said: "We are all delighted and very, very pleased." He said the buyout team was still examining the possibility of offering existing investors a share alternative to its cash offer, to allow them to participate in the new private company. A further announcement is expected tomorrow.

The ability to woo Royal & SunAlliance had been seen as vital to Sara Lee's chances of winning what would have been a closely fought takeover battle. Together, the Matthews family and management team hold 42.2 per cent of the firm's share capital, and last week said they were not open to any offer from an outside bidder. To clinch the deal, Sara Lee would have had to persuade independent shareholders owning 50.01 per cent of the company to back its bid. With R&S committed to accepting the buyout offer at its current level, or, if a rival bidder emerged, at a level matching the counter-offer, it is thought Sara Lee considered the task too great.

Bernard Matthews shares yesterday closed down 20.5p at 183p. They have risen as high as 205.5p since Sara Lee first indicated its interest in the company, just hours after Mr Matthews had announced his own plans to take the group private.

The company floated on the Stock Exchange in 1971. Since then, it has mushroomed in value from £4m to £232m. Mr Matthews decided to seek a delisting after he became frustrated with Stock Exchange rules, which forced him to divest 100,000 shares he acquired in the company as part of his share options entitlement. Mr Matthews, 70, started the business 50 years ago, with an investment of £2.50. Outlook, page 21