Poon snares Harvey Nichols

DICKSON POON, the flamboyant Hong Kong entrepreneur, is confident that shareholders will accept his controversial offer to buy Harvey Nichols and the non-Asian assets of his company Dickson Concepts.

On Friday, after a week's delay, the offer document was sent to shareholders. He told The Independent on Sunday he had been talking to institutional shareholders and found "their feedback has been positive".

However, the offer has been widely criticised by analysts, who accuse Mr Poon of moving the profitable parts of his public company into a privately owned British Virgin Islands registered company, Broad Gain Investments, and paying minority shareholders less than the assets would be worth on the open market.

Mr Poon said: "I genuinely believe that the proposed transactions are in the best interests of the shareholders."

He maintains that his private company "can afford to take a much more long-term view" than some shareholders might be prepared to accept. He is, for example, planning two new Harvey Nichols stores. Money is also required to rescue the ailing Paris-listed ST Dupont business and to develop a luxury bag retailer based on a franchise from the American designer Tommy Hilfiger.

Dickson Concepts, originally a profitable chain of designer fashion shops in Asia, is now in the red although Harvey Nichols is making good money.

Mr Poon is offering HK$1,486m (pounds 119m) for all the non-Asian assets, but because of the way the offer is structured, he - as the main shareholder in Dickson with 51.9 per cent - will receive HK$900m from a special dividend payment, leaving him having to raise HK$600m to buy a group of companies with considerable earnings potential.

Critics say that if Harvey Nichols were sold to a third party, it would attract a far better price than Mr Poon is offering the minority shareholders. But he insists that in making the special dividend payment he is paying a 10 per cent premium over Harvey Nichols's asset value.

According to an analyst in Hong Kong, this makes it a good deal for short-term shareholders who will realise a decent profit on their investment. Longer-term shareholders, who have weathered sharp falls in the Dickson share price, have little to cheer about.

Institutional investment in Dickson is limited. The largest of the institutional shareholders, the US-based Capital Research Management, holds around 2 per cent of the equity.

One fund manager with an interest in Dickson said: "We don't particularly like the deal, but there's not enough muscle to reject it. We're planning to take the money and get out."

Mr Poon has paved the exit route with a promise to increase his holding in Dickson Concepts by 50 per cent, albeit at the less-than-generous price of HK$2 per share, or 60 per cent less than the net asset value per share after the special dividend has been paid.