Hunter set for double strike at retailers

Published on Monday 6 January 2003 00:00

SPECULATION is mounting that the Scottish retail entrepreneur Tom Hunter is preparing a potential takeover bid of the department store Allders, and may merge it with fellow bid target House of Fraser.

Last week Hunter increased his stake in Allders to take it to more than 5 per cent. He may increase his stake in the group further in the next few days.

House of Fraser will release a trading statement on Thursday, which is expected to show that despite recent under-performance, Christmas trading figures were better than expected.

This will increase pressure on Hunter to raise his 85p per share offer that was rebuffed by the board, who argued that it undervalued the retail group.

Hunter is expected to appeal directly to House of Fraser’s shareholders this week in an attempt to gain access to management accounts and other confidential information.

One question he will hope to answer before he tables a formal offer is the size of its debt, which could lie anywhere between 67 million-180 million.

It will be a busy week for the self-made Scot as it appears he is also keen to scotch property group Minerva’s agreed 132 million bid for Allders, thus creating a scenario where he can wrestle control of both retail giants.

A retail source said that in an ideal world Hunter would "like to merge both companies and drop the Allders name".

Retail analysts believe that merging House of Fraser and Allders chains, which together boast nearly 100 stores, could present considerable opportunity for consolidation.

But Hunter will have a fight on his hands. Allders has already said that it will advise shareholders to accept Minerva’s offer.

Minerva, which has hired former Debenhams boss Terry Green to run Allders, offered 160p per share for the chain in an attempt to gain control of the key site in its shopping centre development in Croydon.

Allders has an agreement to be the anchor tenant in the Park Place redevelopment, but Minerva wants to lure a more popular retailer, such as John Lewis, to the development.

In the past two weeks Hunter has built up a considerable stake in Allders. On Friday he bought 350,000 shares in the chain, raising his stake to more than 5 per cent. A stake of 7.5 per cent, a further 175,000 shares, would allow him to block the Minerva takeover.

A spokeswoman for Hunter last week said the stake had been bought to win him "a seat at the table" when the future of Allders was discussed. But reports over the weekend said Hunter was poised to buy further Allders shares this week.

It is also believed that Hunter has drawn up an outline plan to offer Allders shareholders well in excess of the 160p-a-share package tabled by Minerva.

If Hunter did decide to bypass the board and attempt a hostile takeover for the 44-store chain, it would force Green to the negotiating table and could even see him elbowed from the deal altogether. A retail source said: "I think what you are seeing here is Hunter jockeying for a position ahead of any talks on a carve-up of both Allders and House of Fraser."