Thomas and Bob could go to Apax

THOMAS the Tank Engine-to-Bob the Builder owner HIT Entertainment today recommended shareholders to accept a £489m takeover bid from private equity group Apax Partners.

The deal ends the nine-year stock market life of HIT, founded 16 years ago by Peter Orton who ran Muppet man Jim Henson's European operations. He will collect just under £30m for his shareholding and stand down as chairman.

Orton said: 'It's a sad day today, obviously, but the competition is very tough out there and this is a good deal for shareholders. The transition from VHS to DVD has proved difficult in the children's market. Retailers are keen to fill shelves with DVDs but parents don't seem to want to change, partly because they already have kids' videos or because they don't yet own a second DVD player.'

Under Apax, HIT will also have to try to increase its shelf space at America's largest retailer, Wal-Mart, whose decision to trim home entertainment led to a profits warning and chief executive Rob Lawes's departure last October.

Anyone who invested £10,000 when HIT floated in 1996 will collect £96,000. Apax is offering 300p cash per share and has won acceptances from holders of 35% of the equity.

PINEWOOD Shepperton is optimistic that Sharon Stone will lead a flood of film producers back to Britain's two major studios, which floated a year ago. Stone is starting production on the sequel to 1992's Basic Instinct, with the working title Risk Addiction. Headline profits-rose 13% to £12.9m on turnover up 3% at £38.5m in 2004. A dividend of 2.7p is being paid.

Chairman Michael Grade welcomed last week's Budget extension of the current film tax regime to summer 2006, which will boost revenues in the second half of 2005.