Under the deal, Littlewoods would have also been granted board representation and an equity stake in the new business, enabling it to cash in when the company was sold or floated.
Mr Ross's decision instead to accept a pounds 192.5m offer from Marks & Spencer for 19 prime high street shops is expected to come under intense scrutiny when the Moores family, who control the Littlewoods empire, hold one of their regular "forum" meetings tomorrow - the same day that the group publishes its annual results.
The rival offer was made to Littlewoods' advisers, BZW, on 29 May by CVC Capital Partners, which manages pounds 650m of funds including some on behalf of the US bank Citicorp. CVC was lining up Nomura and Credit Suisse First Boston to provide banking facilities.
Under the terms of the bid CVC offered to pay pounds 550m for the chain of 135 shops of which pounds 520m was in cash with a further pounds 30m in the form of loan notes.
It was a condition of the offer that Littlewood's reinvested pounds 20m in equity alongside CVC and its partners.
The offer was amended slightly four days later after feedback from Littlewoods so that CVC would pay pounds 540m in cash with Littlewoods reinvesting pounds 40m in equity.
In a letter to Mr Ross dated 2 June, Michael Smith chairman of CVC, said: "We continue to be highly enthusiastic about acquiring Littlewoods Stores and have attempted to put forward an offer which best meets the needs of the family shareholders, TLO [The Littlewoods Organisation] and the employees, suppliers and customers of the business.
"In calculating the true value of our offer we hope that full consideration is given to our desire to develop Littlewoods Stores as a whole and to preserve the heritage of the brand."
Mr Smith added that, as previously stated, "we are keen to have TLO as an equity partner and would see board representation as an integral part of that".
A dissident faction within the Littlewoods clan last week launched an attack on Mr Ross's handling of the sale to M&S, arguing in a four page memo that the rival bid would have involved fewer redundancies and kept the Littlewoods business trading as a going concern.
The memo also attacked Mr Ross's strategy, saying the management had a duty to inform the company's shareholders of all material facts concerning the sale of the stores business, adding: "This does not appear to be the case."
Littlewoods last week disputed the facts of the memo, saying there had never been a bid of pounds 540m on the table.
It also said the M&S offer had been discussed by the board and that Mr Ross's strategy had the "broad support" of the Moores family.
Opponents of Mr Ross claim the deal with M&S could mean up to 3,500 job losses in the longer run. There could be 1,800 redundancies in the 19 stores M&S is acquiring, since there was no guarantee that any of the former Littlewoods staff would be guaranteed jobs, and a further 250 job losses at Littlewoods' Liverpool headquarters.
The other jobs which would be under threat are in a further 16 stores which Mr Ross intends to dispose of.
He plans to keep the remaining 100 and refocus them on selling ladies fashion wear to the over 45s.
Meanwhile, it has emerged that three members of the Moores family are being sued for $60m in the US by a British businessman.
The suit, filed by Douglas Leese, now a Miami resident, accuses the three - Lady Grantchester, her brother John Moores and son James Suenson-Taylor - of "mail fraud" and "racketeering".Reuse content