Debenhams board 'sold company down the river'

Minority investors in Debenhams yesterday hit out at the department store group's independent directors for recommending a £1.7bn takeover offer, which they felt sold the company "down the river".

Overwhelming support from institutional shareholders meant that Baroness Retail, the vehicle backed by CVC Capital Partners and Texas Pacific Group, can now begin final preparations to delist the department stores group from the stock market. But minority shareholders used an extraordinary meeting to express their disappointment that the company, which was demerged from Burton Group in 1998, would be taken private.

John Farmer, one of 300 private investors who attended yesterday's meeting, accused Debenhams' non-executive directors, of "over-reacting to an opportunistic bid, which later we would come to regret". Mr Farmer highlighted the recent spate of takeover deals that have undervalued leading high street retailers, most notably Philip Green's bid for Debenhams' former stablemate, Arcadia. "We could surely be selling ourselves down the river," he warned.

Peter Jarvis, Debenhams' chairman, denied the charge that the board's decision to back Baroness' bid was "a reaction of nervousness". He said: "I don't feel exposed, I don't feel nervous. I think it would have been unsustainable not to have put these offers to shareholders," adding that they represented a 60 per cent premium to the group's previous share price.

A takeover battle for the department stores group was sparked after a rival private equity consortium, led by Permira, approached the company's board with an indicative 425p-per-share offer back in May.

Other shareholders used the meeting in the Piccadilly hotel to criticise Belinda Earl, Debenhams' chief executive who will part company with the group once the deal is completed, for agreeing to help Permira prepare its initial offer. They noted that Ms Earl, who would have stayed on with the group had Permira been successful. "If this company is good enough for Belinda Earl it's certainly good enough for me," Grace Smith, a private investor, said. Another shareholder said: "Please don't think I'm calling Belinda a fat cat, but that's only because I'm a gentleman."

Ms Earl will leave Debenhams with a payout worth more than £4m, once she has cashed in all her share options. Matthew Roberts, the finance director, will earn more than £2m from his share options. In addition, both could receive bonuses of up to 100 per cent of their annual salaries: £675,000 and £375,000 respectively. The duo's "greed" was criticised by one shareholder, upset that they could collect their bonuses yet he could not collect his final dividend, effectively dragging the offer price down to 463p per share. Many shareholders were equally upset at the prospect that their 12.5 per cent discount for shopping at the department store could vanish - despite a promise from Baroness that it would stay.

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