Dewhirst receives buy-out offer

The UK manufacturer of clothes and toiletries has been approached by its management and some members of the Dewhirst family.

A preliminary approach for the company, which has been a supplier to Britain's best known retailer for more than 100 years, came from the Dewhirst family and the company's executive directors at a price of 85p a share which values the group at around £113m (E177m), according to Reuters.

Dewhirst Group, whose founder helped set up Marks and Spencer in 1884, is not in discussions as yet and it is not certain that a proposal will ensue, according to a company statement.

The people involved in the possible bid hold about 25 per cent of Dewhirst's shares. It is expected that they will seek backing for the bid from banks and outside equity providers if it proceeds.

Although Dewhirst's profits had fallen in the past two financial years, it reported a rise in its latest interim profits, from £10.1m to £11.2m pre-tax. The company made a statement following the sharp rise in its shareprice which closed up 14 per cent to 73 pence upon the news, Reuters reports.

Textile companies are proving attractive to financial buyers. Last month, Alchemy Partners backed the £87.9m (E144m) management buy-out of another clothing company, William Baird. Baird agreed to a 75p a share offer from a management buy-out company, backed by Alchemy Investment Plan. William Baird is taking legal action against M&S for dropping it as a clothes supplier. Shareholders will also be entitled to 75 per cent of any compensation payment, pro-rata to their shareholding, arising from the litigation against M&S, providing it exceeds £1m. The company said the buy-out would provide shareholders with the opportunity to exit following the termination of its relationship with M&S. It would also allow the group to continue with its restructuring programme.