Minority shareholders in Harvey Nichols are considering legal action against the company's independent directors after they unanimously recommended a takeover bid that could lead to the upmarket retailer being delisted from the London Stock Exchange, even if the bid fails.
The lawsuit would be for breach of fiduciary duty and abuse of position. One shareholder said: "I think we would have a very strong case. I think the directors and the company's advisers [HSBC] would be in a very difficult position."
The latest twist in the bad-tempered bid saga comes after Dickson Poon, the Hong Kong entrepreneur who already owns 50.1 per cent of Harvey Nichols, switched the terms of his £137.5m offer for the company. He has now tabled a straight takeover offer of 250p cash per share, the same price as the previous bid, which was a scheme of arrangement. His original bid, which required a 75 per cent majority of the shares Mr Poon does not already own, was doomed to failure as 14.9 per cent shareholder Deutsche Asset Management had said it would vote against it. A meeting on Monday to decide on the bid will now be adjourned. The shares rose 26.5p to 237.5p on news of the fresh bid.
The revised takeover offer requires 90 per cent acceptances but Mr Poon's offer states that should the offer become conditional "it is probable that the listing of Harvey Nichols shares on the official list will be cancelled". A delisting would leave dissenting institutional shareholders in limbo with stakes in a private company. The listing rules state that a company should have a free float of at least 25 per cent of its shares. But a company can apply to delist its own shares with a simple majority of 50.1 per cent, which Mr Poon already has.
Henderson Global Investors, which has a 1 per cent stake, is also opposed to the deal. A fund manager at Colin Hughes, said: "If it came to a delisting of the company when it was against the wishes of a significant proportion of minority shareholders, they [HSBC] would be in a very difficult position. They would be going against potential clients and would have to think long and hard about whether that is something they ... wish to do."
Harvey Nichols' non-executive directors are John Gray, Nigel Rich and Keith Holman.
JP Morgan, which is advising Mr Poon, said it believed the offer was a friendly approach to the shareholders which enabled the bid's supporters to secure a cash exit.
Some investors which had intended to vote in favour of Mr Poon's offer, have said to the company's advisers that they would only do so on condition that Mr Poon would not attempt to delist the company if the bid failed. "We would look very unfavourable on that," one minority shareholder said.
Join our new commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies