DFS offer fails to win over shareholders
The proposed £496m (€737m) takeover of British furniture retailer DFS was on a knife-edge today after two leading investors vowed to oppose the bid.
The stance of the shareholders owning nearly 14.5% of the company represents a major setback to would-be buyer Lord Kirkham and the DFS non-executive board, which has backed the bid and could quit if it fails.
M&G Investment Management and Morley Fund Management pledged to vote against the offer of 445p a share on the grounds that it was too low.
Lord Kirkham, who is chairman of DFS and owns 10% of the company, requires the 75% support of shareholders who are due to vote on the proposal on September 7.
Evolution Beeson Gregory analyst Nick Bubb rated the chances of success at around 70%, adding: “Things are looking pretty bleak for Lord Kirkham.”
A statement from DFS underlined the high stakes involved.
It read: “The independent directors believe that, if the proposals are not approved, they would clearly have to consider carefully their positions.”
The three-strong non-executive team is led by ex-Halifax boss Mike Blackburn and also includes Iceland founder Malcolm Walker and former Rover Car Group managing director Kevin Morley.
But they added: “No decisions have yet been taken, Any decisions would be made in the light of all of the circumstances at the time, including the votes tendered at the meetings and the views expressed by all of the shareholders.”
Lord Kirkham said earlier this year that he believed Doncaster-based DFS would be better placed to overcome growing competition in the home furnishings market by becoming a private company.
The entrance of major retailers from other sectors to the home furnishings market has increased pressure on DFS, which has 70 stores in the UK.
Lord Kirkham has revised his offer price twice in an effort to encourage investors to swing behind his bid. He originally made a takeover approach valuing DFS at £445m (€661.2m) in March.
Directors of DFS contacted other potential buyers after the first approach was made, but said last month that no party had begun due diligence ahead of a possible rival bid.
