Debenhams agrees higher bid

The takeover battle surrounding high street department store Debenhams heated up today as the company agreed a £1.66bn (€2.36bn) offer.

The cash offer by Baroness Retail – a bid vehicle for investment groups CVC Capital Partners and Texas Pacific – trumps an earlier £1.54bn (€2.19bn) takeover deal which Debenhams had been recommending to shareholders.

But directors said today that the latest offer, which values Debenhams at 455p per share, was a fair reflection of the company’s strengths and offered shareholders an attractive return on their investment.

The news sent shares in the company up 5% or 23.5p in early trading to 458.5p.

The widely anticipated offer comes just over a month after Debenhams finally agreed the terms of a separate 425p-per-share offer from investment firm Permira after spending a weekend locked in talks.

But even as the company recommended the first offer to shareholders it continued to talk to the rival suitor.

Retail entrepreneur John Lovering, a director of Baroness Retail, said today: “Debenhams is one of the UK’s great retail companies with strong operating performance and a leading market position.

“We believe there is a wealth of management expertise and experience in the business and we are excited about the company’s future.”

But Permira immediately issued a statement this morning noting the higher offer and saying it was “considering its position”.

Shares in Debenhams have climbed steadily since May this year when Permira first came forward with an indicative offer.

Although shares are currently trading just above the price included in the offer, the bid values the stock almost 38% above its value in early May.