Londis last night dramatically caved in to demands that it withdraw its recommendation of a £40m takeover bid for the convenience store group from Musgrave Investments and also announced it had begun an auction process for the company.
The decision by Londis will be a severe blow to four members of its management team, led by Graham White, the chief executive, who had stood to gain a £20m windfall from the Musgrave deal.
New bidders in the auction are likely to include Nisa Today and the Co-operative Society. Musgrave last night wrote to shareholders saying it would bid again in the auction.
The Londis management last night faced a barrage of criticism from its shareholders and rival retailers who want the chance to mount rival takeover bids for the business. The board was attacked from all sides over the way it has handled the affair.
Londis acts as a supplier of goods to the 1,956 independent retailers in the chain who are also its shareholders.
In a chaotic process, which descended into farce for much of the day, the battle for one of the biggest "corner shops" groups in Britain became increasingly acrimonious.
Last night Londis also issued a statement promising to write to shareholders in due course informing them of the outcome of talks with any other parties interested in acquiring the company.
However, this was not enough to placate angry shareholders, who believe a takeover bid may not be in the best interests of the company.
Musgrave, which earlier in the week thought it had tied up an agreed bid, was furious that Londis had not released it from its original bid agreement so it could talk to shareholders and the press direct.
The group, whose managing director is Seamus Scally, was also angry that a £400,000 break fee was being withheld. However, although Musgrave will now proceed in the auction process, Londis maintained it would only pay the £400,000 in the event that it ends up recommending a higher offer.
Earlier in the day a rival bidder, Big Food Group, had issued a press notice attacking the Londis position and the handling of the sales process by the Londis board.
Bill Grimsey, the chief executive of BFG, said the Londis board had not clarified a number of important issues.
Londis last night confirmed that it would adjourn an extraordinary general meeting scheduled for 30 December which had originally been called to vote on the Musgrave bid. This was one of BFG's demands.
Significantly, a group of Londis shareholders will tomorrow demand a strategic review of the company and the appointment of independent financial advisers to assess its options. Led by Kishor Patel and Adrian Costain, they want the company to organise a beauty parade of potential advisers.
The Londis rebels, thought to represent the interests of up to 500 shareholders, will gather at a special meeting in Neasden to form an action group to fight their corner in the increasingly bitter bid battle for the chain of 2,232 stores, which has a turnover of £1bn.
The shareholders have also appointed David Greene, a lawyer with Edwin Coe, the solicitors who are suing the government on behalf of the Railtrack Private Shareholder Action Group.
Mr Greene's presence will give the shareholders' position even more weight at a time when they feel that their interests may not be being best served by the current board, chaired by Peter Williams.
Many shareholders were angry when Londis recommended the £40m bid from Musgrave which would have given four Londis directors £20m to share.Reuse content