Londis clear way for takeover

LONDIS has cleared the way for a takeover of the business by reaching a deal with its four executive directors.

It will pay them a total of £2m million to give up controversial rights under a share option scheme, the board announced yesterday.

British sources say that deal has already allowed third parties back into the bidding process for the group.

Cork-based Musgrave Group is said to be the favoured choice of Londis franchisees, according to a recent poll.

However, the mutually-owned Londis is in negotiations with other potential buyers, including Big Food Group and the Co-op, according to British reports.

From the Londis perspective, the deal opens up the prospect of a sale to the benefit of all its operators.

Before the new agreement the four executive directors could have walked away with half the proceeds of any takeover bid.

"This agreement concluded following a unanimous decision of Londis' independent directors reflects the common wish of all the parties to resolve the issue swiftly," a statement said.

In a recent poll, shareholders indicated they would welcome a takeover of the business by Musgrave in preference to others.

Last December, Musgrave secured a deal to buy the business for £40 million. The deal fell through when it become clear the executive directors would get half of the amount paid by the Irish group for the business.

Subsequently, KPMG was brought on board by Londis to examine how the group could be put on the market and achieve more than the £10,000 shareholders stood to gain from the original Musgrave offer.

However, the binding agreement with all four members of the executive management has been ended following a cash payment of £2m to the four.

Londis' sales have grown from £104 million to £516 million, an operating loss of (£118K) to an operating profit of £3.7 million, and net assets have risen from £3.7million to £22.1 million in the past few years.