GUS, which is already embroiled in a pounds 1.6bn hostile bid for Argos, said it noted the action initiated on Wednesday by American Business Information and said: "GUS intends to vigorously assert its rights and will make a further statement when and if appropriate."
American Business Information, based in Omaha, has made a counter bid of pounds 515m and launched legal action claiming that GUS had knowingly aided and abetted alleged breaches of conduct by Metromail's management.
Analysts said the legal action and the prospect of a bid auction could prove distracting for GUS's management as the Argos battle heated up. But they said the company could still pull off both deals. "Fighting on two fronts isn't ideal but it is a limited distraction," said Nick Bubb of SG Securities. "It might make people think that GUS has got other things to do with its money and so might not raise its bid for Argos. But most people recognise that it could do both."
The court case is due to be held next Friday. The claim alleges that Metromail directors failed to hold a fair auction for the company and so breached their fiduciary duty to shareholders. American Business says it had stated its intention to Metromail to offer more than $32 per share for the business, subject to due diligence. It was completing that process when Metromail announced an agreed deal with GUS at $31.50.
Analysts said GUS could increase its offer to $35 per share and still not be accused of overpaying. However, some said Lord Wolfson, the GUS chairman was likely to walk away rather than get involved in an auction. He has already admitted that paying pounds 500m for a company that made a loss last year, was a "full price."
The collapse of the deal would be a significant blow to GUS which had seen the business as a key part of its expanding database and information empire in America. It had wanted to put Metromail together with Direct Technology, a business it acquired last year and whose main office is only 10 miles from Metromail's base.
GUS shares fell 2p to 780p on the news. Argos shares rose a penny to 605p against GUS's offer price of 570p.Reuse content