Hostile takeover may 'take years'

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The Independent Online
Any hostile takeover of the CWS "would take years to pull off", a leading expert on the Co-operative movement has warned, writes Richard Halstead.

According to Iain William-son, director of the Co-op Union, which represents the interests of Co-op employees, the structure of the board and the voting rights enshrined in a pyramid of corporate members, regional committees and finally individual members is so labyrin- thine it would deter a traditional hostile bid

"To get a majority on the main board would take a very long time," Mr Williamson said. "And that is the only body which can decide what parts of the CWS to sell and to whom."

Andrew Regan's bid, through the Galileo investment vehicle, has been widely tele- graphed but not actually submitted. It is said to offer individual members up to pounds 1,000 each for their pounds 1 stakes.

Sources close to Galileo admit that their chances of getting their hands on such prize assets as the Co-op Bank are remote. "We will put the CWS in play, and see what happens," said one.

Observers are speculating that the preferred Lanica-Galileo tactic would be to use the bid as a "Trojan horse" to create enough dissent among the grassroots CWS members to force their elected representatives to consider reform.

"Once the possibility of a sell-off of assets is on the table, and perhaps a white knight is in the frame, Regan can line himself up as the bidder for the parts of the business he really wants," said one investment banker.

The top of the CWS will be a hard tower to storm. The 30-member board represents around 70 per cent of the votes in the CWS, including the powerful Co-operative Retail Services (CRS), the largest "corporate" member. While only 10 "corporate" members (local societies or groups of shops, of which the Co-op has 300) are required to call an EGM, any bidder would need to have a majority of the board on its side to have any hope of getting a motion passed.

Galileo advisers say that their bid, when published, will ask the CWS to convert itself into a limited company and then consider the offer.