Bill Grimsey,the chief executive of Big Food Group, is stepping up the pressure on Londis shareholders to consent to a takeover by his retailing empire.
But shareholders in the convenience store co-operative seem more concerned with escalating their assault on the Londis board than any alternative offers for the company.
A shareholder action group, formed to block a recent takeover approach that gave four directors a £21m windfall, will this week write to management to renew their demands for the resignation of the non-executive directors.
The four executive directors have an option on the rights to 51 per cent of the value of the company on a change of control, but many shareholders believe the non-executives should not have granted the option and are calling for a new board of independent directors.
BFG appealed direct to Londis's franchise-holding shareholders last month, saying that it wanted to launch a bid, after the board had already agreed to a takeover by Musgrave, the Irish retailer. Shareholders were outraged that the directors stood to make £21m from the Musgrave deal while they would receive only £10,139 each.
BFG promised to offer double this to each shareholder. KPMG has now been appointed to sort out Londis's corporate governance issues, carry out a strategic review of the company and conduct an orderly auction. KPMG is understood to have received approaches from up to nine parties, including BFG.
To keep up his offensive and get shareholders on side while the KPMG review is taking place, Mr Grimsey wrote to Londis's 1,950 shareholders at the weekend to detail the benefits of joining the BFG group. He says there is a "compelling case for bringing Londis and BFG together", claiming that the combined group would have £5.5bn in sales.
This would give it a buying power to rival Tesco and Sainsbury, which are also targeting the convenience store market. "Londis's retailers would benefit from many commercial advantages to better compete in today's rapidly changing trading environment. The Londis chilled and frozen food offers would be strengthened," Mr Grimsey said. However, the shareholder action group remains committed to independence.
BFG will meet with KPMG this week to establish the timetable for the auction process. "We intend to make a formal offer for Londis at the earliest opportunity, although we do not expect this to be in the immediate future," George Greener, BFG's chairman, said in an accompanying letter. "Our proposals would have given you £20,300 against the £10,139 you would have received from Musgrave. This approach will underpin any future offer we make for Londis."
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