THERE were strong indications last night that Unigate and Hillsdown were close to agreeing terms whereby the St Ivel- to-Malton hams group would acquire the food- to-housebuilding conglomerate at around 217p per share.
A spokesman said that smoke was puffing up the chimney but it was too early to say whether it was white or black.
Earlier in the day, the two companies put out a joint statement that they were in discussions which may or may not lead to a recommended offer by Unigate for Hillsdown.
On May 18, Unigate was forced to announce that it had been in talks and these had been broken off as there had not been a recommendation from the Hillsdown board, chaired by Sir John Nott.
Unigate took the unusual step of saying at the time that it valued Hillsdown at 207p per share or a little more than #1500m.
City reaction was to push Hillsdown shares 8p higher to 206.5p, while Unigate retreated 16p to 636.5p.
The setback was due to City fears that Unigate will have to go to shareholders for additional funds or else take on a substantial amount of debt.
Hillsdown, whose shares have underperformed for most of this decade, announced earlier this month that it would spin-off its chilled foods business and its Fairview New Homes housebuilding division while retaining the packaged food activities such as Typhoo Tea and Cadbury's Biscuits.
The furniture business, of which Christie-Tyler is the largest, would be marketed to find a buyer. Analysts have valued the business at around #250m.
Fairview is thought to be worth about #500m.
Unigate, chaired by Ian Martin, is most interested in the chilled foods as that would substantially increase its involvement with the British supermarkets and give it a much stronger position in Europe.
But there has been criticism that Unigate shareholders would not necessarily value the non-chilled activities as highly as the Unigate board and would be reluctant to support a scheme which would involve long delay before all the unwanted activities are disposed off.
But few doubt that chief executive Sir Ross Buckland would rapidly integrate the chilled business and also the Hillsdown poultry activities into the existing group framework.
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