BRITT Allcroft, the Southampton-based media group behind children's favourite Thomas the Tank Engine, has pulled out of talks on a possible takeover.

It said yesterday it had terminated the talks with children's TV show producer HIT Entertainment. Shares plummeted, trading down 12 per cent by 105p at 770p.

Britt Allcroft, which also boasts classics such as Sooty and Captain Pugwash, said it had been unable to obtain satisfactory financial terms for combining its business with HIT.

But, directors said they would continue to keep other strategic alternatives under review.

HIT, whose characters include Bob the Builder and Kipper the Dog, approached Britt Allcroft last month about a possible all-share offer worth 750p per share, valuing the company at almost £225 million. The combined group would have created the biggest producer of children's television outside the US.

Reports suggested Britt Allcroft's management would be looking for an offer price of around £13 per share.

Converted for the new archive on 25 January 2001. Some images and formatting may have been lost in the conversion.