The dissident faction have launched a stinging attack on Littlewoods chairman James Ross's strategy just 24 hours after he announced the pounds 192.5m deal. A group of the Moores family members, who control the Littlewoods empire, have written a four-page memo to the other shareholders complaining about elements of Mr Ross's plans for the pools to catalogue company.
However, analysts say the opposition is unlikely to place Mr Ross's position as chairman in doubt.
The disgruntled group of family shareholders say the board ignored a rival bid of pounds 540m for the entire high street chain which would have involved fewer redundancies and would have seen the Littlewoods business trade as a "going concern." The Moores clan is due to discuss the matter on Tuesday when they meet for one of their regular "forum" meetings on the same day Littlewoods is due to report its annual results.
The hostile memo, which challenges Mr Ross's strategy at every turn, states: "The management of our company has a duty to inform shareholders of all material facts concerning the attempted sale of the stores business, This does not appear to be the case."
It claims that there was a pounds 540m bid for the whole of the stores business from a "team of well respected and successful retailers, many of whom were responsible for the dramatic improvement at BhS". It says the bid would have been backed by "the largest venture capital group in the UK" together with a well known international bank. Under the terms of this offer, it says the stores and head office staff would have been retained and the business would have been bought as a going concern.
The note goes on to make a series of criticisms about Mr Ross's strategy to retain the rump of the high street business, saying it is risky, expensive and will generate low returns. It says:
r The business will not generate sufficient funds to meet shareholders' expectations.
r The plan will have substantial capital expenditure requirements.
r The proposition to trade smaller stores selling predominantly ladieswear is a "serious financial risk as this market is one of the most competitive in the UK."
r The revised proposition has not been sufficiently tested.
r Too much management time will be required at a time when the group should be concentrating on improving its core home shopping business.
The memo goes on to criticise the current business performance, the high levels of stock and the track record of the current management team. .
Littlewoods disputed the facts of the note, saying the board never had a bid for pounds 540m cash on the table. There were also thought to be a number of other conditions attached to the offer. The company said the bid had been discussed by the board and that James Ross's strategy had the "broad support" of the Moores family.
"We communicate actively with the shareholders and James Ross has their broad support," the company said. Littlewoods admitted that there might be one or two family shareholders who were unhappy with the strategy and said that the memo had come from just one family member.
It is understood that no complaints were made when the Moores family was told about the plan to sell certain stores to Marks & Spencer.
One analyst said: "There may have been questions about the financing of the other deal. And when you have got Marks & Spencer sitting there with an offer it is not surprising the decision went that way."
However, one Littlewoods insider said that if Mr Ross had not made the Moores family sufficiently aware of the various alternatives, he risked alienating some members of the family. "He should have taken more soundings."