Londis could face hostile BFG bid

LONDIS shareholders in Britain are considering support for a possible hostile bid by the Big Food Group for a minority stake in the mutually-owned wholesale distributor.

Such action will put further pressure on Musgrave’s €89 million bid for the group which the Londis board has backed.

Adrian Costain, deputy chairman of the Londis Shareholders Action Group (LSAG), said: “We could go hostile with BFG. It scores more highly than Musgrave under our criteria.”

“Although a hostile bid situation could be very damaging to Londis and the independent convenience sector, the prospect cannot be entirely discounted,” he said.

“But we would rather just vote down the Musgrave proposal and then move the business in the direction we wanted to go,” said Mr Costain.

The only other hostile attempt to buy a mutually-owned company in Britain was in 1997 when Andrew Regan tried, but failed, to buy the Co-operative Wholesale Society with a £1.2bn bid.

The Londis board needs to win the support of 75% of the shareholders.

The latest move was motivated by anger among some of the Londis shop owners in Britain.

In the view of those considering to back the BFG bid the board has been insensitive to the rights of the shareholders in this instance.

In fact some Londis shareholders have been quoted in the British press as describing the board’s attitude as “cavalier”.

They accuse the board of trying to force the sale on them.

To counter the hostility from some quarters, the Musgrave board is undertaking a series of roadshows in an attempt to win over the retailers to the group’s offer.

Musgrave will argue to the retailers that the offer is in their best interest.

However, the BFG renewed interest in the Londis chain means Musgrave will have to step up its bid to win hearts and minds if the bid is to succeed.

The disaffection of some shareholders with the Londis board and the Big Food Group involvement has forced Musgrave to step up its bid.