Grampian in pounds 69m deal

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The Independent Online
Grampian Holdings, the Scottish mini-conglomerate, yesterday announced a pounds 69.4m recommended deal to take control of the Edinburgh Woollen Mill shops chain and its related Scottish Woollens textile manufacturing operations. The cash and shares offers are to be part financed through a one-for-five rights issue at 125p a share to raise pounds 14.8m.

The two transactions will bring a windfall of around pounds 45m for the Stevenson family, which is the biggest shareholder in the two companies being acquired. David Stevenson, chairman, will join the Grampian board, along with EWM managing director Colin Birrell, as part of a wider shake-up of the board. News of the deal sent Grampian's shares 4p lower to 140.5p.

The acquisition represents an about-turn for Grampian. It has been talking for at least 18 months of floating its 25 per cent stake in Edinburgh Woollen Mills, which it picked up after the merger with its Pitlochry Knitwear business in 1993.

The group, chaired by Bill Hughes, said the EWM board had carried out a strategic review earlier this year which concluded that a flotation was not the preferred option. As a result, Grampian had been able to make an offer which would be earnings-enhancing.

Mr Hughes described Edinburgh Woollen Mills as "a rare opportunity to expand the group, affording excellent prospects for sustained growth".

Some analysts, however, criticised the acquisition as running contrary to the previously stated intention of giving more focus to the business, which already encompasses veterinary products, transport and sporting goods.

One analyst suggested that the deal represented "a disguised reverse takeover", with the new directors coming aboard and providing a source of possible successors to Mr Hughes.

Edinburgh Woollen Mills has 229 outlets in tourist areas, market towns and visitor centres.

Grampian yesterday unveiled an 11 per cent rise in pre-tax profits to pounds 4.75m for the six months to June. The interim dividend rises 8.3 per cent to 1.95p.

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