Unrepeatable offers

27 July 2003

The move is designed to procure a higher bid. But it looks a dubious use of sharholders’ funds. It breaks the cardinal rule that break fees should be linked to a bid being made. The move is designed to procure a higher bid. But it looks a dubious use of shareholders’ funds.

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Debenhams, the UK department store group that is in discussions with Permira about recommending a £1.5bn offer, has agreed to pay a rival private equity bidder up to £6m to assemble a higher offer.

Debenhams has offered to pay a consortium comprising TPG and CVC £1m a week so long as they continue to investigate bidding for it at more than 425p a share. This is the price that Permira has offered. The money will be paid irrespective of whether the consortium ultimately makes a bid.

TPG and CVC are reportedly some weeks behind Permira in conducting their due diligence.

Permira and Debenhams are still locked in talks about its offer, which the private equity group will only make if it is accompanied by a recommendation. Debenhams has agreed to pay Permira £6m if it does not recommend its bid.

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