Bob rethinks Gullane £157m bid

A SHOCK profit warning from Thomas the Tank Engine group Gullane has derailed a £157m merger proposal from would-be suitor Bob the Builder's owner HIT Entertainment.

Gullane's shares dropped 32 1/2p to 440p as it said contract delays meant profits would not be higher than last year's £9.2m. The market had been looking for £11.7m.

HIT Entertainment said its 500p-a-share takeover approach earlier this week 'was predicated upon market expectations for Gullane at that time'. Friday‘s warning may have shunted those plans into the sidings for good.

An HIT statement said: 'The board of HIT is considering whether to make an offer for Gullane and if so, at what price.'

Most of Gullane's problems centre on Guinness World Records, the annual catalogue of feats and superlatives that Gullane bought from Diageo last year for £46m.

Various GWR licensing agreements that Gullane hoped to pull off have been delayed, while the drop in US sales of the book is worse than expected. Gullane said overall revenue from its other businesses was in line with expectations.