Debenhams shareholders back bid
LONDON, England (Reuters) -- Shareholders in British retailer Debenhams approved a £1.72 billion ($2.9 billion) private equity takeover bid on Monday, one year after former stablemate Arcadia was sold to tycoon Philip Green.
The winning bid for the department store group came from Baroness Retail, a consortium including buyout firms CVC Capital Partners and U.S. Texas Pacific Group. It raised its offer to 470 pence per share last month to beat rival private equity firm Permira and partners.
Some small shareholders attending a meeting were not convinced that selling out was the right thing to do but were overtaken by proxy votes, representing 99.5 percent or 215 million shares in the company, which were in favour of the deal. The firm's shares will be delisted on December 5.
Small shareholders were worried that the department store chain was being sold too cheaply, and others struggled to see why it should be sold at all.
"If it's worth buying, it's worth keeping,'' said one shareholder at the meeting.
Arcadia and Debenhams were demerged from the Burton Group in 1998. Arcadia, owner of the Top Shop chain, was sold to Green for around £850 million, but a near doubling in profits since then has led to criticism that the price was too low.
Debenhams management had an uphill struggle convincing small shareholders they were doing the right thing.
Chairman Peter Jarvis said the Arcadia deal was struck at a price of less than six months of sales, but Debenhams shareholders would be getting more than 12 months of sales.
"We are selling this company to Baroness at a very full price,'' he said, saying Debenhams share price was only 256p before any bid rumors emerged.
Jarvis said a key factor in the company's decision to sell was that its share price since the de merger had not reflected its consistent dividend and earnings growth, having traded at an average discount of 30 percent to its retail sector peers.
"It has been a consistent drag to this company. It has been debilitating,'' Jarvis told the meeting.
He said the Baroness offer was the best that he could get.
"The lack of interest from trade buyers indicates perhaps the company is not being sold too cheap,'' he added.
There was also frustration expressed by some shareholders over the estimated £4 million that Chief Executive Blind Earl will take home when the deal is complete.
Earl faced criticism from shareholders for having helped a rival bidder formulate its offer, though it later pulled out and it now looks as though she might be out of a job.
"She was not sticking up for shareholders but for herself,'' one shareholder said.
Another criticized what he called management's "greed'' in collecting bonuses while shareholders will not be paid a final dividend, in effect dragging the offer price down to 463p.
Jarvis said the bonuses were being paid for work done last year and that "every penny was earned.''
Shareholders checks will be in the post by December 18. The takeover is being done through a scheme of arrangement which means it can be wrapped up quickly before Christmas.
Copyright 2003
Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
