Lees directors in £5.6m bid to take firm back into private hands

SCOTLAND is poised to lose another of its listed companies after the directors of macaroon bar and snowball maker Lees Foods unveiled plans to take the company private.

Chief executive Clive Miquel and his fellow directors have launched a 230p-a-share all-cash takeover bid, which values the Coatbridge-based business at about £5.6 million.

The offer is just 2.7 per cent above the closing price on Thursday, the last trading session before the weekend, but provides a 31.8 per cent premium above the company’s average share price of 175.5p over the past three years. Lees’ shares closed up 3.1 per cent or 7p last night at 231p.

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Cash to fund the deal will come from Lloyds Banking Group through two short-term loans payable this summer and a longer-term £2.4m loan that would end in 2017.

The directors said they had no plans to change Lees’ strategy or management and that they would keep the firm’s headcount across its factories at Cambuslang and Coatbridge at the present 270 or may even expand the workforce.

They added: “The management of Lees Foods believes that the proposal to return the company to private ownership is in the best long-term interests of the business. We are grateful for the support we have received from our major shareholders and Lloyds for helping us get to this stage in the process.”

But the directors remained tight-lipped over why they were choosing to take the company private. Pre-tax profits at the company have risen from £379,000 in 2008 to just under £1m in 2010, despite rising sugar prices and other higher raw material costs. In October, Miquel predicted 2011’s profits would be “well ahead” of City forecasts for £900,000.

All of the members of the board at Lees, which has been listed on the Alternative Investment Market (Aim) since 2005, are involved in the proposed management buy-out and so the offer has been recommended to shareholders by the firm’s nominated advisers at Shore Capital. Normally, such an offer would be considered by a firm’s non-executive directors, but Lees chairman, Chris Grieg, died in February.

The directors already have the backing of investors representing 40.9 per cent of the shares not held by management. Coven and Exchange Shareholders have indicated they intend to vote in favour of the deal, taking the total to 70.9 per cent. The directors need the backing of 75 per cent of the votes for the deal to go through.

Among those shareholders who have already backed the buy-out is Alasdair Locke, the Aberdeenshire-based oil tycoon who made £120m when he sold his London-listed energy services firm, Abbot Group, to US venture capital outfit First Reserve in 2007 for £909m.

John Justice Lees, a grocer’s son from Coatbridge, invented the macaroon bar in 1931 while experimenting with chocolate and coconut above his father’s shop. The company was bought by Northumbrian Fine Foods in 1991 but was taken back into Scottish ownership two years later by Raymond Miquel, father of the current chief executive, and business partner Klaus Perch-Nielsen.

In 2003, the firm bought Glasgow-based ice cream wafer maker Waverley Biscuit Company, which had been founded in Edinburgh in 1908.

If the deal is agreed, Lees will join a growing list of Scottish departures from the stock market. Robert Wiseman Dairies delisted in January after being bought by Germany’s Müller, while life sciences pair Axis-Shield and ProStrakan were both taken over last year.

A Canadian pension fund is currently mulling a possible takeover bid for football pitch firm Goals Soccer Centres.