KKR takes aim at Littlewoods

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The Independent Online

Kohlberg Kravis Roberts, the feared US takeover specialist, has lined up behind Barry Dale, the former chief executive of Littlewoods in his audacious pounds 1.1bn bid for the Liverpool-based football pools, mail order and stores empire.

News that KKR is lending its considerable muscle to Mr Dale will send shock waves through Littlewoods management, some of whom have been confidently predicting his approach would not be taken seriously by the Moores family which owns every share in the company.

Mr Dale is also being advised by Dawney Day, the corporate finance boutique, while Littlewoods has retained Kleinwort Benson. Littlewoods is among the first targets of Glenisla, the newly-formed UK investment arm of KKR, which in 1989 shook Wall Street with its successful $26bn bid for RJR Nabisco. Glenilsa is run by Ian Martin, former chief executive of Grand Metropolitan, whose brief is to search Britain and Europe for acquisitions for KKR.

The RJR move, described in graphic detail in the best-selling book, Barbarians at the Gate, gave KKR a reputation for aggressive, leveraged buyouts. In the US, the firm has tried to temper its image, however, making long- term investments in real estate, publishing, leisure and cable TV.

In this country, though, KKR has never made a substantial investment. If sucessful, Littlewoods would be the first. In 1983, it considered, and rejected, entering the ferocious Thomas Tilling-BTR battle as a white knight for Tilling. The store group, Gateway, has twice appeared on its shopping list.

Despite its sleepy image at home, Littlewoods has blazed a trail in opening successful large, budget stores in Asia and eastern Europe Littlewoods' sprawling size and the potential of the overseas stores, launched when Mr Dale was chief executive, are understood to have appealed to KKR.

Another attraction is the way Littlewoods staff have been denied a share in the business.

In the US, by contrast, KKR has put great store by motivating staff through grants of equity. Glenisla is also understood to have been impressed by Mr Dale, believing he was held back when chief executive by the Moores's lack of business acumen.

With the firm's clout behind him, Mr Dale can go for a knockout blow and persuade the Moores family to agree to sell. While the company's management has been slow to respond to his bid, indications from some members of the deeply factionalised family have been encouraging. They are frustrated at having their cash tied up in the firm and are also fed up at the constant shareholder in-fighting.

His children's inability to follow on from where Sir John Moores, Littlewoods late legendary founder, left off has led to a series of extraordinary rows and board room battles. These culminated in the last few months in the departures of Mr Dale and Sir Desmond Pitcher, the former chairman.

Mr Martin said he could not discuss the Littlewoods bid. "All I will say is no comment," he said.