Scholl wins the battle but faces a war

The battle may be over but the war has yet to be won by Scholl, the footcare group that has spent most of the past couple of months fighting off the advances of a group of hostile shareholders led by Julian Treger and Brian Myerson, two South African investors. Messrs Treger and Myerson want the company sold to the highest bidder and to this end they tried - but narrowly failed - to change the complexion of the Scholl board at an extraordinary shareholders meeting earlier this week.

The company is now looking forward to getting back to the business of managing itself but it will be lucky if it is able to do so, since the rebel shareholders are threatening to intensify their campaign. Preparing for the meeting has been costly, both in monetry terms and in management time. One board director says that planning for the meeting has occupied 14 hours a day for the past seven weeks.

If the rebel shareholders had launched a bid for the company and lost they would not be able to come back again, under Takeover Panel rules, for another 12 months. In this case there has not been a bid, but the amount of distraction caused is in many ways comparable. To allow the rebels to lay permanent siege seems as wrong as it would do in a takeover battle. Messrs Treger and Myerson have become like the the bad loser in tennis, who refusing to admit he is beaten, continues to challenge until finally he wins

If such proxy battles become more common in the City - Messrs Treger and Myerson have involved themselves in similar battles at Liberty and Signet - there might be a case for a change in the rules, giving companies a12-month moratorium at least from the threat of further shareholders' meetings.

In this specific case there is the separate issue of what money lies behind the public face of Messrs Treger and Myerson. No doubt it is bona fide, but the company and its advisers have no means of telling. Section 212 notices normally enable a company to seek out the true identity of its shareholders, but this method runs into the sand when the shares are held by nominee companies registered in places like Panama and the British Virgin Islands.