Littlewoods boss slams 'flimsy' bid

Letter lambasts Barry Dale, reports Chris Blackhurst
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LITTLEWOODS, the football pools and retailing group, has written to members of the Moores family, its shareholders, attacking Barry Dale's pounds 1.2bn bid proposal as "extremely flimsy" and questioning his motives.

Leonard Van Geest, the chairman, pours scorn on the sacked chief executive's approach in a letter dated 27 October, a copy of which has been leaked to the Independent on Sunday.

Mr Dale is known to have received positive indications from some senior family members since making his approach more than two months ago.

Mr Van Geest reminds the 34 Moores, who between them own all Littlewoods' shares, that Mr Dale was dismissed from the company without compensation seven months ago.

"Mr Dale is no doubt aware that the board is currently reviewing with shareholders the options available to them as regards their investment in the company," writes Mr Van Geest. "You may, therefore, wish to consider generally the motivation for [Mr Dale's] approach and, in particular, the extent to which [it] is an opportunistic attempt to take advantage of the fact that this ongoing review is not yet complete."

Mr Dale is being advised by Dawnay Day, the corporate finance specialists, and has put together a consortium of heavyweight institutional backers including Prudential, Legal & General, Electra and Candover. He has declined to make a firm offer before examining the company's books in detail. Because it is a private company, Littlewoods is not bound to make the detailed declarations of a publicly quoted company.

A decision whether to allow Mr Dale to inspect the accounts will be taken at a shareholders' meeting in Liverpool next month. Nevertheless, he is criticised for not making a firm bid.

Mr Van Geest points out that:

l a letter from Dawnay Day "does not constitute a formal offer or even a firm commitment to make an offer";

l the Dawnay Day letter "indicates a possible 'valuation' for the company without indicating whether ... this would be the price at which an offer would be made";

l Mr Dale's letter says his management team will comprise himself and John Coleman, the former Texas Homecare chief, but does not name other members including the finance director;

l "there is no evidence from [the Dawnay Day] letter that it has sufficient or, indeed, any committed finance to back an offer";

l on the business plan, "there is no specific indication as to how it intends to achieve these objectives or of its detailed strategy for the group".

Writes Mr Van Gees: "After more than two months of work to formulate an offer, the board considers that [Mr Dale's] proposal remains extremely flimsy."

In advance of the extraordinary meeting, the Moores are urged to attend a two-day family "Forum" gathering set for the 28 and 29 of this month to discuss the Van Geest letter.

Mr Van Geest stresses there is no requirement to provide further information to Mr Dale. He says: "You should also be aware that pursuing this proposal would involve the company in significant expense and divert substantial management time and effort away from the task of running the business."

The chairman also claims that moving forward with Mr Dale's approach alone "would be unlikely to maximise value on a sale of the company". If the family showed support for Mr Dale, the board, writes Mr Van Geest, "would need to examine all possible alternatives for a sale of the company, whether as a whole or on a break up basis ... This would almost certainly lead to a major public sale process ... Clearly, this process, regardless of its outcome, would have a considerable impact on the morale of managment and employees."

A vote against Mr Dale, writes Mr Van Geest, would be taken as a sign the board should continue with its ongoing study to enable shareholders to free up their holdings. It would also rule out any other bids: "The board will also regard a vote against pursuing [Mr Dale's] proposal as an indication that shareholders do not wish it to proceed with any proposals of a similar nature."

Dawnay Day has written to shareholders, stressing the seriousness of Mr Dale's intentions.