Battle looms as Wassall ups Allied Carpets stake

THE PROSPECTS of a bid battle for Allied Carpets grew yesterday after Wassall, the diversified industrials and investment group, raised its stake in the retailer to 14.8 per cent.

Wassall bought a further 7.5 million shares at 58p and is now the largest shareholder. It has asked for a meeting with the Allied Carpets board with a view to making a formal offer. The group sees the retailer as an investment opportunity and would continue to run the stores under the existing format while improving trading performance.

The shares rose 5p to 57p, valuing the business at pounds 50m.

Wassall is competing with Brown & Jackson, the Poundstretcher retailer, which has approached Allied Carpets with a 50.5p per share offer.

Some of Allied Carpet's major institutional shareholders are unhappy with the way the board, led by chairman Julian Lee, has handled the bid interest. A spokesman for Meditor Capital Management, owner of 5.5 per cent of Allied's equity, said: "In a situation like this management has the responsibility either to talk to the bidders or go direct to the shareholders and seek their views. In our view, given the circumstances, we would have preferred them to talk to Brown & Jackson."

Meditor will meet new Allied chief executive Geoff Brady on Monday and push him to meet both bidders. Allied's net asset value is about 45p per share and institutions feel its stores have scarcity value due to strict UK planning regulations.