OFT rejects Carpetright-Allied takeover

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The Independent Online
CARPETRIGHT, the carpet retailer run by Lord Harris, has been turned down by the Office of Fair Trading in its attempts to buy its main rival, Allied Carpets.

Carpetright expressed an interest in acquiring Allied Carpets for 67p per share, valuing the struggling retailer at pounds 60m. The deal would have give the enlarged business 25 per cent of the UK carpet market, far ahead of its nearest rival. This would have led to an almost certain referral to the Monopolies and Mergers Commission. After seeking confidential guidance from the OFT it is understood that Carpetright decided not to proceed with its offer.

Instead, Carpetright completed a deal earlier this week paying Allied Carpets pounds 14m for 29 branches of Carpetland and Harris Carpets. That deal pushes the group's share of the UK carpet market to around 14 per cent, compared with Allied Carpets' 11 per cent.

Shares in Allied Carpets, which is still trying to recover from accounting irregularities, closed unchanged at 53p yesterday

Carpetright refused to comment on any possible interest in Allied Carpets yesterday. However, Jon Moulton, head of Alchemy, the venture capital group that is also interested in buying the company, said: "I heard from several sources that Carpetright had been advised that they would have OFT problems."

Mr Moulton confirmed that Alchemy is "still interested in proceeding" with an offer for Allied Carpets. It is understood to have made an earlier offer of around 55-60p per share. It is now waiting for more financial information from its target to enable it to make a revised approach.

Allied Carpets has been struggling since the summer when it revealed a problem with the way its sales were being calculated. This led to the departure of the finance director and sales director.

On Tuesday Allied Carpets said its like-for-like sales have improved from being 13 per cent down year-on-year in October, to 3 per cent down in the weeks since then.

The company said that in the light of the improving sales trend and the sale of the loss-making Carpetland stores, it did not feel able to recommend the offer at 67p per share.

But the board added that it had not terminated discussions and remained "open-minded" towards any revised approach.

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