US bid wins Hillsdown

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The Independent Online
US BUY-OUT firm Hicks, Muse, Tate & Furst yesterday claimed victory in the bid battle for Hillsdown Holdings and immediately outlined its plans to expand the struggling food business.

The American firm's improved pounds 537m offer, equivalent to 147p per share, finally succeeded after rival bidder Candover Investments backed out and the non-executive directors immediately recommended the deal to shareholders.

Candover's decision to withdraw could mean that Michael Teacher, Hillsdown's chief executive, could soon leave the company as he fronted the Candover team. He is currently employed on a 12-month contract and was paid pounds 404,000 last year.

John Muse, Hick's Muse's chief operating officer, denied his firm had paid too much for the Typhoo tea and Chivers Hartley jams group.

"We are looking at this business not on the basis of how it has performed in the past but how it can perform in the future. We are very excited about this company. We think there is significant value to be unlocked, which was not recognised by the stock market."

He said the company would be expanded with particular emphasis on the canning operation, which includes the HP Foods brands, and the preserves operations, which encompass Hartley jams.

"These businesses could be expanded on a pan-European basis through organic growth and acquisition, while margins are improved at the other grocery businesses," Mr Muse said.

He added that the Christie Tyler furniture business could also be expanded on the Continent but that the poorly-performing poultry business would be sold when the cycle turned.

Although most of the divisions will be kept, the former conglomerate is likely to be split into three parts while the Hillsdown name could disappear.

Dean Metropouolos, who has worked with Hicks, Muse on its other grocery deals, is likely to be installed as non-executive chairman.

Hicks, Muse already controls 29.9 per cent of Hillsdown shares, which it has acquired at an average price of 145.6p. Hillsdown shareholders will also receive the 4p final dividend.