Hunter bows out after Allders accepts Minerva's increased offer

Tom Hunter, the Scottish retail entrepreneur, has made a profit of just £170,000 before costs in the bid battle for Allders after the department store group agreed an increased offer of £161.7m from Minerva, the property group.

Mr Hunter, who once harboured hopes of merging Allders with House of Fraser, has agreed to sell his 10.8 per cent stake to Minerva. He will make little more than £60,000 after commission and stamp duty. If advisers fees are included he is likely to have made a loss.

Mr Hunter expressed disappointment that he had been unable to play a part in the Scarlett Retail bid vehicle led by Minerva and Terry Green, the former Bhs and Debenhams chief executive.

Mr Hunter said: "In the past few days we have held extensive discussions with Scarlett Retail and Minerva but have been unable to find a way in which [we] could participate jointly in an offer for Allders."

One source close to Mr Hunter said: "I think he's quite sanguine about it. He saw an opportunity. He had a go. Now he's on to the next thing."

But a City retail analyst said: "There was a lot of bravado and swashbuckling talk about consolidating the high street but it's all come to nothing. The heat seemed to go out of it once Philip Green [a close friend of Mr Hunter] became distracted by Safeway."

Mr Hunter backed away from making a bid for House of Fraser in January and is now prevented by Takeover Panel rules from bidding again for six months.

Scarlett Retail has increased its offer for Allders from 160p per share to 164.1p. This includes the payment of a 4.4p dividend to which Mr Hunter is entitled. With Mr Hunter's stake Minerva now has 57 per cent of Allders. The shares closed 5.5p higher at 163.5p.

The deal is likely to lead to the departure of Harvey Lipsith, Allders' chief executive, and Dominic Lavelle, the finance director. Both are on one-year contracts that will see Mr Lipsith receive £304,000 and Mr Lavelle £191,000. Stephen Tague, the managing director, may also leave with a £240,000 pay-off.

Allders will be run as a subsidiary of Minerva by Terry Green and Phil Cox, a former Asda finance director. Both men are paying just £125,000 for a 10 per cent stake each in the company.

Minerva is primarily interested in Allders' flagship site in Croydon, south London. Minerva wants to protect a £500m investment in Park Place, a million square foot town centre retail development in which Allders will be the anchor tenant.

Andrew Rosenfeld, Minerva's chief executive, refused to rule out a break-up of the 45 Allders stores. "We'll move in and appraise it over a period of months," he said. "We've got no preconceived ideas about what to do about the business assets."