Gullane takes a £6.3m hit

SOOTY and Sweep were suffering a crisis of confidence after owner Gullane Entertainment slashed their value in a move that will wipe out two-thirds of the company's profit this year.

Shares in Gullane, which also owns Thomas the Tank Engine and Guinness World Records, slumped 27 1/2p to 405p on news of the £6.3m write-down. But it said profit before tax and exceptionals was still expected to be in line with the £9.7m result of last year.

The share price fall brings into question whether Hit Entertainment, which owns Bob the Builder, will proceed with a proposed 500p-a-share takeover bid for Gullane. This would value the group at about £150m.

However, sources close to the company said the lower price might also draw out other potential suitors, including Carlton Communications, thought to be considering a bid for the group.

The write-down, which will be booked for the year to 30 June, applies to Gullane's stake in Bridgefilms - a joint venture with Sooty International - whose revenues from Sooty the glove puppet and Mumfie the elephant have been lower than expected.

Gullane shares fell from 610p at the start of the year to 349p early last month. They then bounced to 485p on news of Hit's approach, although the prospect of an offer appeared to cool when Gullane issued a profit warning a fortnight ago.