Lord Kirkham's £509m bid to take control of DFS Furniture looks set to succeed tomorrow, just weeks after the City had written off the deal.
Shareholders had argued that an earlier £496m offer from the DFS chairman, who founded the retail chain in 1969, undervalued the company, while analysts were critical of the way the approach had been handled.
But a revised offer appears to have won over the City, and insiders are confident that the bid, when put to shareholders at tomorrow's extraordinary general meeting in Doncaster, will get the green light.
That is despite two leading investors, Morley and M&G, which own around 14 per cent of DFS between them, publicly stating that they will continue to oppose Lord Kirkham's battle for control.
Said one insider: "While we have Morley and M&G openly opposed, it's never going to be a shoe-in. But the share price tells you the market believes it will go through. The sense from the bankers and so on is that they are feeling reasonably comfortable."
A number of investors have sold out recently, including the chain's biggest shareholder, Newton Investment Management. It had 10.6 per cent of the shares and had been against the original offer.
Others to have sold out include Jupiter Asset Management, which had 4.6 per cent, and New Star Asset Management with 2.5 per cent.
That has enabled a number of hedge funds, including Trafalgar Asset Managers, to move in on the expectation the deal will go through, pushing the share price up. It closed on Friday at 452p.
Rhys Williams, a retail analyst at broker Seymour Pierce, commented: "The worm appears to have turned. Newton has sold out that 10 per cent, and that appears to have been bought by hedge funds who want the deal to go through."
It is also thought that recent poor trading updates from rivals Courts and MFI Furniture have further helped convince investors to back the deal.
Because of the way the offer is structured, as a scheme of arrangement, Lord Kirkham needs a 75 per cent majority. He holds a 10 per cent stake but cannot vote himself.Reuse content