AB Foods, the makers of Ovaltine and Twinings Tea is closing on the £500 million purchase of HP Foods.

A four-way fight looks likely for HP, which produces its famous brown source at its factory in Aston, Birmingham and Lea & Perrins sauce in Worcester.

AB, Premier Foods, Kraft and Unilever are all thought to be interested in the company which has been making HP Sauce since 1900.

Its French owners Danon have instructed their investment bank Lazard to seek offers for HP to give it greater focus on its three core areas.

The brand would make a good fit for AB Foods, which has previously declared its intention to expand in the food business through acquisition.

Other groups likely to be interested include Premier Foods, which already makes HP canned products under licence, and also private equity groups led by Doughty Hanson, which owns the Paxo and Bisto foods group RHM.

Kraft could also be interested along with Unilever for the company which had a turnover of £180 million last year. The sales figure represented more than two thirds of Danone's annual turnover from its "other food business".

But Danone is now thought to be ready to shed HP as it looks to concentrate on its three core businesses.

Analysts say the HP business makes annual after-tax profits of around £31 million and, with a multiple in line with recent sector deals, would have a price tag of around £430-£450 million

Up for sale in the HP grouping are its Amoy noodlebased meals and soy sauce range, Daddies ketchup and Rajah Indian herbs and spices range as well as HP sauces and Lea & Perrins worcestershire sauce. The group includes three plants in the UK and one in the U.S.

AB Foods has been eager to expand, buying Mazola cooking oil and Ovaltine in 2002 and then two food ingredients businesses from Australia's Burns, Philp & Co for £717 million.

The success of grocery brands such as Ryvita crispbread and Silver Spoon sugar

and a warchest of £ 650 million have put it in a good position for further expansion.

Premier Foods could also be interested but the price looks high for a group.