Lees Foods buy-out referred to Takeover Panel over broker fees

ShareSoc argues that Shore Capital – which made the recommendation because all the confectionery firm’s non-executive directors are involved in the offer – stands to be paid higher fees if the 230p-a-share deal is accepted. They say that means it is not independent, although it is understood the situation is not unusual.

The Takeover Panel said it does not comment on specific cases.

Many individual shareholders say the offer undervalues Coatbridge-based Lees and are demanding a price above 300p.

David Stredder, a Lees shareholder who is also a director of ShareSoc, said the group believed it had enough investors on side to vote down the attempt to take the company private at a meeting later this month.

Yesterday, Lees published results for last year which showed rising revenues and profits.

Sales were up 8.9 per cent at £20.3m, leading to a 6.1 per cent increase in pre-tax profit to £1.1m as margins were squeezed by the rising cost of ingredients.

Chief executive Clive Miquel said management had taken successful steps to minimise the impact of rising input prices.

“These steps included a programme of continuous investment in our plant to drive production efficiencies, a strategic review of our product packaging that has resulted in a meaningful reduction in packaging usage, and targeted price increases across our customer base for our range of Lees and Waverley products,” he said.

Lees also said it was sitting on a cash pile of about £2m and proposed a dividend of 7.5p per share, up from 7.2p last year.

Last week the company postponed the date of a general meeting to vote on the buy-out from 15 May until 22 May to give shareholders time to consider the results.