Pifco may launch hostile bid as Kenwood talks fail

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Pifco may launch a hostile takeover bid for Kenwood after merger talks between the two electrical appliance groups broke down yesterday, according to City sources.

The company is believed to have had an offer that was pitched substantially above Kenwood's 118p current share price rejected. Michael Webber, chairman of Pifco, refused to comment on whether the company, which has been courting Kenwood for two years, would now make an aggressive strike.

David Nash, chairman of Kenwood, said the company "has never received a firm offer from Pifco," though it did consider a proposal which it did not believe "would lead to a satisfactory offer that could be put to shareholders. Discussions, therefore, have been terminated and as a result Kenwood is no longer in an offer period."

Colin Gordon, the group's new chief executive, and Mr Nash said Pifco's approaches had been a distraction and the group could now focus on moving the company forward.

Kenwood, which has seen its shares slump from almost 400p three years ago, has been under pressure from dissident shareholders, which led to the departure of Tim Beech as chief executive in February.

Kenwood, which yesterday reported a collapse in underlying profits from pounds 16m to pounds 4m for the year to April, announced an additional pounds 15.5m restructuring provision. This will include cutting more than 16,000 product lines to 2,000, shifting manufacturing overseas and further, unspecified redundancies. No final dividend is being paid.

Responses to Kenwood's plans were mixed. Julian Treger of UK Active Value Fund, Kenwood's second largest shareholder, said he had been impressed by the new management and indicated that UKAV was considering increasing its 12 per cent stake.

However, Patrick Orr analyst at Panmure Gordon, was sceptical: "This is a one-brand company. It's basically going to be a very long haul for shareholders."