City & Corporate: Apax courts investors over planned HIT buyout

Venture capitalist Apax Partners has drafted in M: Communications to promote its agreed buyout of HIT Entertainment, the company behind children's TV programme Bob the Builder.

M co-founder Nick Miles is leading the account and will help Apax to secure the support of shareholders, who own 65 per cent of HIT's equity.

HIT, which has been advised by Finsbury partner James Leverton since last November, revealed last week that it was in talks with Apax. This Monday it agreed a price of around 300p a share, valuing HIT at £489m.

The company's directors, including HIT founder and chairman Peter Orton and chief executive Charles Burdick, have already agreed to the deal.

Former director Mike Luckwell and the US-based Leach family - each owning seven per cent of HIT - are also supporting Apax's acquisition.

Apax has also won over several institutional investors, meaning the buyout firm has 35 per cent of HIT's share capital in the bag.

But HIT's remaining shareholders must still tender their shares for the planned deal to go ahead at the end of May.

On Monday, HIT also posted pre-tax profits of £2.9m for the six months to 31 January. The figure was down £11.7m on the £14.6m the company made for the same period in 2003.

The company blamed its 'mixed performance' on 'challenging trading conditions' and 'the weakening over the period of the US dollar'. Much of HIT's revenue comes from America, where the company is set to launch a pre-school digital channel.

HIT also plans to launch a children's radio service in the UK, which will see Bob the Builder and Thomas & Friends - the TV serial based on Thomas the Tank Engine that was acquired by HIT in 2002 when it bought the Thomas brand - appear on radio for the first time.

The Thomas brand is celebrating its 60th anniversary this year and accounts for 23 per cent of HIT's turnover, while Bob the Builder accounts for approximately 15 per cent of group revenue.

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