Sara Lee, the US foods and consumer products group behind brands such as Playtex, Pretty Polly and Douwe Egberts, yesterday initiated a hostile $167 million (€170.6 million) cash bid for Courtaulds Textiles, after the British company rejected its approach.
The 100p a share offer is a 60 per cent premium to Cour taulds' closing price of 62p on Friday. But Mr Colin Dyer, Courtaulds' chief executive, said Sara Lee was trying to "steal the company on the cheap".
The shares closed 80 per cent higher yesterday at 115p.
Sara Lee plans to create 300 jobs in Killarney in the next two years in the manufacture of women's underwear following its return to the former Pretty Polly plant.
Courtaulds employs about 1,640 people in plants in Portadown and Lurgan, Co Armagh, and Limavady, in Co Derry, which produce underwear for Marks & Spencer. Factories in Cookstown, Co Tyrone, and Irvinestown, Co Fermanagh, were closed two years ago and further cutbacks are expected.
The prospect that Courtaulds could lose its independence highlights how the textile sector has shrunk since the days when it was a mainstay of Britain's economy.
According to the Organisation for Economic Co-operation and Development, the sector has shed more than 600,000 jobs in the past 50 years.
It employed slightly more than 400,000 people in 1997, the latest year for which figures are available.
In November, Courtaulds issued a profits warning and announced a shake-up, which it hoped would cut costs by £50 million.
Courtaulds' value to Sara Lee lies in its lingerie and hosiery brands such as Gossard, Berlei and Aristoc, and its relationship with Marks & Spencer, which accounts for 40 per cent of Courtaulds turnover.
There would also be scope for synergies and economies of scale in manufacturing and product development.
Sara Lee makes $1.7 billion in apparel sales in Britain and Europe, and Courtaulds would add about $1.5 billion in annual sales.
Mr John Bryan, Sara Lee chairman and chief executive, met Courtaulds' management last Thursday. Discussions continued into the weekend but the two sides remained far apart on price.
Sara Lee has promised to improve sales of Courtaulds' brands and has said the combined company would also have extra buying power with suppliers.
It also said its takeover proposals removed the risk and uncertainty currently being suffered by Courtaulds' shareholders.
Sara Lee's shares fell 5 per cent to $16 in early New York trading yesterday. They have fallen steadily from their highs of about $31 a share, reached in early 1998.
