Ready to put the boot in: The boardroom split at shoemaker C&J Clark threatens to break out into open warfare. Russell Hotten reports

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The Independent Online
MONEY troubles and family squabbles often go together, and for the shoe dynasty C&J Clark they have been a potent mixture. Friday's meeting of directors was more tense than usual, as the divided board squared up for another session.

That meeting was to discuss the terms of a pounds 160m bid from Berisford International, the property and commodities group. But the dispute could deepen this week, with suggestions that the rebels may break their vow of silence and go public with an alternative strategy for the company.

The affair has brought brothers and cousins on the board head to head. But the saga has a supporting cast of thousands. Other shareholders include 500 members of the Clark family and many of the 17,500 employees worldwide. One insider said: 'There's a lot of hostility. That's inevitable when you have relatives dividing on a passionate issue like this.'

Both sides are desperate for a change in the company's fortunes. Pre-tax losses were pounds 3.5m for the half-year to last July, against a pounds 2.5m profit the year before. Second-half figures, due in a week, will see an improvement but may not be enough to lift C&J Clark out of the red for the year. The dividend has dwindled to 1.75p from 3.5p at the interim stage. Nevertheless, ownership has made many Clarks immensely rich. The family owns about 70 per cent of the company, with the rest equally shared between the employees, trusts and institutions, including the Prudential and Legal & General.

One of the few things that unites the two sides is an abhorrence of publicity. This intensely private Quaker company is trying to keep the lid on the bruising row, but this may soon change. One director told the Independent on Sunday: 'To say that we are unhappy is an understatement. People are beginning to express themselves freely. It cannot be very nice when you have brothers like Richard and Daniel taking opposing sides. They are both very charming and feel hurt at what has happened.'

Nevertheless, a corner of the veil has already been lifted to reveal a diverse collection of characters. These include the imposing figure of Lance Clark, a 56-year-old former Scots Guardsman and Bath rugby player, who is leading the fight to keep C&J Clark independent. His supporters include Caroline Gould, a non-executive director who is a mild-mannered architect.

On the other side is Walter Dickson, the chairman, a career executive. Mr Dickson is the first non-Clark to hold the post. One of his main allies is John Clothier, the millionaire managing director who is said not to be a man to let sentiment get in the way of winning the battle. 'He's a fast mover, very get-up- and-go,' said an acquaintance. Another Clark, Daniel, also backs Mr Dickson, as do the 'outsider' directors, Malcolm Cotton, Patrick Farmer and Alan Mackay.

It is not the first time C&J Clark, believed to be the UK's fifth largest private company, has been in turmoil. Founded 168 years ago by two Quakers, James Clark and his brother Cyrus, the company made sheepskin slippers as a sideline to the family farm. But by 1863 the business was virtually insolvent. Quaker friends and creditors removed Cyrus and pushed James aside to bring in new blood in the form of William Stephens Clark, who built the company from a cottage industry into a mass-market shoe maker.

The current crisis stems from C&J Clark's rapid expansion and the cost of buying back pounds 40m of family shares three years ago. The company, with sales of about pounds 590m, also owns the K-Shoes and Ravel brands. But imports of cheaper shoes have plunged the UK industry into recession - about seven in every 10 pairs of shoes bought in the UK are from abroad.

Many shareholders are pessimistic about the company's future and just want out. Bids had already come from Electra, an investment trust, and Fii, a rival shoe company. But Berisford's approach is believed to have the support of most of the board.

Lance's alternative is to keep the company in the family but bring in new faces. He seeks the removal of Mr Dickson and another 'outsider', Jim Power, a non-executive director and former finance director of Burton. They would be replaced by Lance's nephew, Hugh Pym, an ITN journalist, and Michael Markham, a businessman who is not a family member.

Also backing this strategy is Lance's cousin, Richard Clark. Aged 55, balding and with glasses, he is an independent Mendip district councillor. He still lives in a modest house fronting the main road at Street, Somerset, where 1,000 employees still work at the company's headquarters.

The final member of the gang of four is Roger Pedder, Richard's brother-in-law, who has worked for the Halfords and Harris Queensway store chains. Plain speaking, he was said to have remained steadfast in his commitment to Lance's plan despite a hostile reception from shareholders at an extraordinary meeting last year.

These four speak for about 13 per cent of the shares but are said to have the backing of shareholders representing up to 30 per cent. Details of their strategy for the company have not been made public, but last week the Independent on Sunday was told that they include slimming down the board, raising finance to buy out disgruntled shareholders, and possibly a stock market flotation in a couple of years. The four argue that Berisford's bid severely undervalues the company.

Berisford would make C&J Clark one of four divisions within the group and push hard for overseas sales. Some argue C&J Clark's fortunes went sour when it moved into retailing but Berisford is likely to keep the operation. Nevertheless, workers fear a Berisford takeover would mean job losses. Critics say the company would close some UK factories, destroying the Quaker company's reputation for benevolence.

Perhaps there is no room for sentiment if the survival of the company is at stake. A City analyst, who feels Berisford's bid has its logic, said: 'Maybe it is time for Clark to bite the bullet and join the real world. If times are tough, shareholders will seek sanctuary with the highest bidder.' Whoever wins, it is doubtful this historic company will ever be the same again.

(Photographs and graphic omitted)

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