Brunswick to assist Londis takeover bid

Icelandic bank Kaupthing has drafted in Brunswick for advice on its £60m joint hostile bid for convenience store chain Londis.

Brunswick partners Anita Scott and Rurik Ingram began advising Kaupthing two weeks ago as it planned a joint bid for the chain with former T&S Stores finance and buying directors Geoff Purdey and David Crellin.

Brunswick is also helping former Crellin and Purdey bid vehicle Lancelot, which is hoping to get enough support from Londis’s shopkeeper shareholders to force the company’s management to open its accounts so that a firm offer can be made.

Londis’s management has already recommended to shareholders a similarly valued bid by Irish retailer and Budgens chain owner Musgrave.

The offer was improved from £40m after the Londis Shareholders Action Group publicly criticised the structure of the offer as too favourable to the company’s management. The group’s PR offensive resulted in the replacement of much of Londis’s executive board and the withdrawal of management’s recommendation of the original offer (PRWeek, 27 February).

Although Lancelot and Kaupthing’s offer is of a similar value to that of Musgrave, the bid team is making much of its structure, which would allow Londis shopkeepers to keep 60 per cent of the company and receive a £31,000 windfall in cash and shares.

Londis management and Musgrave have begun an investor relations tour which will involve eight meetings with shareholders, the first of two which took place in Exeter and Heathrow. Shareholders will begin postal voting on the proposal over the next few weeks with the final vote taking place at an extraordinary general meeting on 22 June.

Reputation Inc has been advising Londis’s management since Musgrave’s original bid last December. Musgrave has retained Fleishman-Hillard in the UK since 2002.

Last week (19 May), Musgrave UK executive chairman Eoin McGettigan said the company planned to use Londis as a platform for expansion in the UK, which would see Musgrave become the largest single supplier to independent shop owners in the country.

Londis has reported a one per cent increase in turnover to £516m for the financial year to January 2004. But management said that the exceptional costs of Musgrave’s abortive bid for the company in December had contributed to an operating loss of £3.9m against an operating profit of £3.8m the year before.

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