Stakes raised in battle for Londis

A RIVAL bid to Musgrave's £60 million (€90m) offer for Britain's Londis chain of 2,000 convenience shops may be launched as early as today.

Lancelot, a bid vehicle backed by two British retailers and a private equity firm, plans to persuade the British Londis shareholders to sell them the company for the same price as the Irish firm but will offer shareholders a stake in British Londis going forward.

Musgrave's has posted its offer documents to the shareholders, who will receive £31,266 each, in advance of an extraordinary general meeting of the company on June 22 to vote on the deal.

However, Lancelot headed by Geoff Purdy and David Crellin, both ex-executives with rival convenience store group T&S, claimed shareholders will make more with their bid. Under their plans, due to be released this morning, the shareholders will get the same as the Musgrave offer, but will also retain 60% of the firm.

"Our offer will give them some cash upfront and enable them to share in the benefits of future growth," said Mr Purdy.

British Londis management has been locked in talks with key shareholders over the weekend to persuade them to back the Musgrave bid. The Irish cash and carry group has been attempting to acquire British Londis for the best part of six months. A bid for the company last December had to be withdrawn after it emerged that half of the proceeds would go to just four directors.

A revolt by shareholders was staved off, but some of them are supportive of the Lancelot plan, according to reports. The Lancelot offer, first mooted last month, is being published early as it needs to get detailed financial information on British Londis.

"We're in a Catch 22 situation. The board of British Londis won't let us in the data room, but shareholders can't make their minds up on our offer until it is formal," Mr Purdy told a Sunday newspaper.

Londis management are still backing the Musgrave offer, which was not the highest of the 21 approaches it received, because it is a family run business and the combined buying power of the two wholesale operations would better equip British Londis to deal with competition from big grocers like Tesco. Last week the Big Food Group said it had abandoned its plans to make a full bid for British Londis. For the takeover to be successful, the Irish firm needs 75% of shareholders to vote in favour. British Londis made an operating loss of £3.9 million in 2003 on turnover of £516m.