Poundstretcher bid for Allied sparks row

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ALLIED CARPETS, Britain's second largest carpet retailer, found itself at the centre of a takeover row yesterday after Poundstretcher operator Brown & Jackson revealed it had made a pounds 46m offer for the struggling group.

Brown & Jackson, a South African controlled company which also owns the What Everyone Wants and Your More Store discount chains, said it had approached the Allied board last month with an offer of 50.5p per share. But it has been angered by Allied's insistence that, in return for detailed financial information, it must sign a confidentiality agreement which precludes it from pursuing anything other than an agreed deal for 12 months.

Johann Visser, chief executive, accused the Allied board of protecting their own positions rather than seeking better value for shareholders. "There is too much in it for them," he said.

Allied Carpets, which appointed a new chief executive last month after a profits warning last year forced a boardroom clear-out, said its new chief executive, Geoff Brady, had conducted a review of Allied's operations. It wants to put the findings to shareholders rather than "rush into the hands of a low-ball suitor". Mr Brady, who joined from Kingfisher, said: "I can see that there are huge opportunities to ... restore profitability."

Allied shares closed 10p higher at 48p.

Brown & Jackson, which is expected to report buoyant results and a return to the dividend list with its results on Friday, will seek further meetings with Greenhill, Allied's financial advisers. "We want to see if we can sort this out," Mr Visser said.

Allied has been struggling since last August when it revealed an accounting problem that led to a pounds 3m exceptional charge to profits. All the original directors have since gone , including managing director Ray Nethercott, who left after it emerged that contrary to statements made at the time, he had been aware of the problems. The shares have fallen from 320p to just 32p in the last two years.

Allied sold 29 stores to rival Carpetright for pounds 12m in January but its trading has continued to deteriorate. Pre-tax profits in the six months to December fell to just pounds 59,000 from pounds 9.5m the previous year. More bad news followed in June when it said sales were down 7.6 per cent.

Analysts expect the company to report a pre-tax loss of pounds 5m in its year to June 1999.

The company's problems started when it emerged that Allied Carpets shops had been booking sales when orders had been taken rather than when they had been fitted, as was company policy. The action had the effect of dragging forward sales figures on which management bonuses were calculated.

Outlook, page 15

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