Monsoon shares tumble after bid talks fail

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The Independent Online

Peter Simon, the chairman of Monsoon, will have to maintain his infamously fractious relationship with the City after poor trading forced him to abandon his putative plans to privatise the fashion retailer he founded more than three decades ago.

A collapse in sales at Monsoon, best known for its boho chic fashions, left Mr Simon unable to agree how much to offer minority shareholders for the 24.6 per cent of the company he owns. News of his decision to terminate talks, which he started last July, accompanied warning on profits. Shares in the group fell 23.5p to 369p, wiping £40m off the value of the company.

It is the second time in three years that Mr Simon has tried and failed to take full control of the fashion chain. Last time he was thwarted after minority shareholders dug in their heels over his attempt to buy an extra 20 per cent of the group through a complicated scheme that did not offer investors a premium. The group's shares have more than doubled since.

Analysts had predicted a clash between Mr Simon and the company's minority investors over the valuation of any bid because most of them are still the same hedge funds who refused to accept his previous offer.

Monsoon proved it was not immune to the effects of the retail downturn last autumn, and its trading has since deteriorated, leaving the retailer with too much stock going into the winter sale. Yesterday Monsoon reported a 4 per cent fall in underlying sales for the past 10 weeks, and admitted sales at its new stores have been "disappointing". The company increased its trading footprint by 30 per cent last year after buying 43 former Etam stores.

It warned profits for the year to 27 May would be "adversely affected", prompting Seymour Pierce to slash its forecast by 12.5 per cent to £56m. The broker also cut next year's forecast by £11m to £68m.

Richard Ratner, at Seymour Pierce, said the company had too little "transitional merchandise" - an area in which it normally excels. Given the unseasonable weather, this is hitting demand, he added.

Mr Simon has an irreverent attitude towards corporate governance, shunning the likes of independent directors. He avoids the City by refusing to discuss the group's financial results with the media. The company's sole non-executive board member is Anton Simon, Peter's brother.