French join bid battle for Allied Carpets

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The Independent Online
THE TAKEOVER battle for Allied Carpets became an auction yesterday when a French carpet company made an approach regarding a cash offer of 85p per share valuing the struggling retailer at pounds 77m.

The offer has come from Tapis Saint-Maclau, the largest carpet company in France. It is controlled by the wealthy Mulliez family, which also controls the huge Auchan hypermarket chain and the Decathlon sports stores which have recently started opening in Britain. The French group said it would make the offer provided it was recommended by the board.

Its interest followed an announcement yesterday that Wassall, the investment conglomerate, intended to make a pounds 72.5m offer for Allied Carpets priced at 80p per share. Wassall had earlier increased its stake in Allied Carpets to 23.7 per cent after acquiring a further block of shares at 70p. The shares closed 18.5p higher at 86p.

The two approaches outstrip the proposed 50.5p per share offer made last week by discount group Brown & Jackson. It said yesterday that it was preparing to start due diligence on the business next week.

Its advisers denied the price had now become too rich for the Poundstretcher group, saying the company would make a decision on the valuation when they had seen more detailed financial information. Allied Carpets advised its shareholders to take no action.

Schroders, Allied's largest shareholder, bought another million shares in the company yesterday taking its holding to over 13 per cent. It said it would take no decision on the bid battle until next week, when Allied Carpets' new chief executive, Geoff Brady, will report the group's annual results alongside his three-year recovery plan for the struggling retailer.

So far major shareholders have been impressed by his plans, which include holding special customer sales events, raising margins and improving staff morale. "At this rate it could fetch more than 100p," one institition said.

Mr Brady, who only joined last month, stands to collect a huge windfall if the group falls to a takeover. He is employed on an 18-month contract paying pounds 220,000 a year. He was also awarded a million share options priced at 34p per share and a million "phantom" share options at the same price. These are currently worth pounds 1m so in total he could make at least pounds 1.3m for just a few weeks' work.

Although Mr Brady accepts that the board could not turn down a knock- out bid he has said that he "would prefer to prove that my strategy is correct". Earlier this week he promised "one of the fastest turnarounds in U K retailing".

Allied Carpets is still trying to recover from an accounting scandal last year which led to the departure of several board directors including managing director Ray Nethercott.

Mr Brady joined Allied Carpets from Kingfisher where he had been heading the expansion of its new Big W concept.

Allied is expected to report losses of around pounds 4m next week. Although it claimed to have pounds 5.4m of net cash at the end of June, this was before July's rent and wage bills. The company has said it received other expressions of interest in addition to those from Tapis, Wassall and Brown & Jackson. It declined to comment on the status of those talks yesterday.

Outlook, page 15

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