Lord Kirkham yesterday won his protracted battle to buy back DFS for £507m despite failing to convince the company's two biggest institutional investors to back his 455p-a-share offer.
But the takeover bid from the sofa group's founder and chairman only just scraped through, with investors holding 20 per cent of the stock voting against the deal. Had just 5 per cent more of the company's shares been voted against the deal, it would have been blocked. Lord Kirkham was not allowed to vote his family's 10 per cent stake.
Morley and M&G, who had a combined 14 per cent stake, yesterday insisted the offer still undervalued the group despite managing to get Lord Kirkham to increase it three times.
Huw Jones, the director of corporate finance at M&G, said: "We believe DFS is an excellent company and that the offer undervalued its future prospects."
Although in the past M&G has chosen to retain its shareholding in instances when it felt investors were being sold short - such as PizzaExpress - it will be forced to relinquish its stake in DFS because the deal was structured as a scheme of arrangement.
It was left to one private shareholder to voice his protest to the deal at yesterday's extraordinary meeting in Doncaster, which saw 75 million shares voted in favour of accepting Lord Kirkham's cash. Shares in DFS, which has traded as a public company for just 10 years, are scheduled to be delisted on 3 November.
Lord Kirkham said yesterday that he thought he had paid too much for the company he founded more than three decades ago, but conceded that the offer would have probably failed had he offered less. "While I think it's fair, it's a bit fairer to shareholders than to me," he said.
A spokeswoman for Morley said: "We [along with other institutional shareholders] had consistently opposed these offers and urged him to increase the original 415p bid because it undervalued the company. We didn't accept the 455p but we have the satisfaction of achieving an additional 40p above the original offer price for our clients and are happy to move on knowing that we've pushed them as far as we could."
Lord Kirkham, whose family put up £140m of the funding, estimated it would take him 10 years to pay back the £370m he borrowed to buy back DFS. He denied he would seek to refloat the business when he next wants to cash in his shareholding. "The whole purpose was to bring it back into the family," he said.
Asked whether he really would have quit had shareholders blocked his bid - as he had signalled - he said: "I can honestly say that I don't know. It would have depended on how I felt at the time and if the people who'd voted against had been supportive."
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