Montagu in the soup over `double booking'

A City row has erupted between Johnston Group and its former adviser Samuel Montagu, in which the company has accused the merchant bankers of having advised a hostile predator TT Group at the same time as it still represented Johnston.

A spokesman for Samuel Montagu, a subsidiary of HSBC, dismissed the accusations by Johnston's chairman Gordon Bissett, and described the letter to shareholders in which the chairman made them as "regrettable and somewhat hysterical".

SBC Warburg has since taken over as adviser to Johnston, and supports Mr Bissett's letter attacking Samuel Montagu.

Gordon Bisset urges shareholders in the letter to ignore TT's bid, and says he is seeking clarification from Samuel Montagu on its relationship with TT Group, which launched its unsolicited bid for Johnston earlier this month.

Mr Bisset said: "Samuel Montagu, advisers to TT, were our advisers too. They faxed a letter of resignation to me on the morning of launching the unsolicited tender on behalf of TT.''

Bisset said TT had been purchasing Johnston shares since January and adds: "I am seeking clarification of Samuel Montagu's role in and knowledge of this.

"I have more than once sought confirmation from Samuel Montagu that no employee of Samuel Montagu who has had any dealings with Johnston Group has taken any part in advising TT on any aspect of the tender offer," he said, adding that the company has not responded.

"Aside from the regulatory issues raised, I am appalled by Samuel Montagu's conduct in this sorry affair, which I believe falls well short of what a client is entitled to expect," Mr Bisset said. He concluded that TT's offer of 500p a share "grossly undervalues the earnings and prospects of Johnston Group" and he urged shareholders to ignore it.

A spokesman for Samuel Montagu rejected Mr Bisset's comments yesterday: "Samuel Montagu has never given advice to Johnston, we have never done a deal for them, we were never going to do a deal for them. We were not in possession of price sensitive information when TT was preparing its approach.

"Johnston did list us as their adviser in their accounts. This was simply because Philip Kendall [of Samuel Montagu] knew them. Mr Kendall left to join Coopers & Lybrand six months ago. Johnston know that and SBC Warburg know that. We are very annoyed," the spokesman said.

He added that Bisset acknowledged in his letter to shareholders that the Takeover Panel had already ruled there were no regulatory issues involved in Samuel Montagu's position.

The Johnston letter says it has raised concerns with the UK Takeover Panel over TT Group's use of Samuel Montagu as advisers.

Johnston said the Takeover Panel has ruled that because TT's tender offer is governed by the Substantial Acquisition Rules, the provisions and protections of the City Code on Takeovers and Mergers do not apply. ``We are considering the wider regulatory position with our advisers," Mr Bisset said.

TT Group on 6 June announced a tender offer for 2.9 million Johnston ordinary shares at 500p each, representing a 27.46 per cent stake. TT Group already owns 2.53 per cent of Johnston.