Outlook: GUS

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The Independent Online
LORD WOLFSON of Great Universal Stores has the air about him of a man who has bought a pig in a poke and is now casting around for someone else to blame.

Seven months after he won the bid battle for Argos, he is furious that his acquisition has not lived up to the rosy prospects painted by the defence in the heat of battle. He has written a stonker to the former directors, with the thinly veiled threat of legal action against them and, by definition, their advisers Schroders, and the lawyers' meter is running.

It is a long time since we were entertained to anything like this. The last such bust-up most of us can remember was back in 1983 when GEC cut up rough after buying Avery, the weighing machines business. Lord Weinstock refused to pay the fees of the advisers (Schroders incidentally). It was this little local difficulty that prompted investment banks to insist on payment before bids have been formally concluded.

What is clear in this case is that Lord Wolfson is hopping mad. He raised his bid from pounds 1.6bn to pounds 1.9bn for a business that is clearly worth substantially less than that now.

It is not obvious, however, that there is a case to answer. At the time, GUS had little option but to raise its bid since the market had risen. The fall in value since is partly attributable to the decline in markets and the torrid time most retailers have endured.

The Takeover Panel's conclusion that Argos did not breach any of its rules weakens the Wolfson argument still further.

It is common tactics in any hostile bid to accentuate the positive but saying that part of the business has "great potential" (as Argos did with its Dutch stores, now closed by GUS) is not a guarantee of anything. Lord Wolfson has bought and sold enough companies to know it is a case of buyer beware. He should bite his lip and stand down the lawyers before Argos responds in kind.