CityBeat: The DFS double bluff
The offer for DFS from Lord Kirkham is turning into a test of nerves, writes Glynn Davis
Lord Kirkham, the founder of furniture business DFS, is not one for courting the media but he’s been getting plenty of column inches of late with his decision to offer 445p a share to take the company private.
What he prefers to spend his time doing – and what he has been doing for the past 34 years – is working very hard behind the scenes growing his beloved DFS. The media spotlight has rarely shone on him because it would have found it difficult to prise him away from his office in Yorkshire.
Although this characteristic has proved priceless for the business it could prove to be his downfall in the current bid situation. It seems that one of the key reasons for investors to accept his offer – regarded by many shareholders to be less than generous – is because Lord Kirkham could walk away from his life’s work if the vote goes against him.
Flagging this up, in the offer document, Lord Kirkham was unable to give any assurance as to his “continuing motivation and contribution” to the business if he lost the vote.
But evidence suggests that he would find it mightily difficult to leave DFS, having devoted much of his life to growing the business into a market leader. And it looks like some of the institutions have sussed this out and are no doubt using it as a support for their intention to vote against Lord Kirkham at the company’s EGM on September 7.
On the basis that Lord Kirkham will not easily leave the business, he seems to have little option other than upping the terms of his bid, which is what his bankers and legal team are believed to be currently working on.
All this does, however, overlook the simple fact that Lord Kirkham has Yorkshire stubbornness running right through him and this could prove to be the imponderable factor in this game of poker currently being played out between Lord Kirkham and DFS’ major shareholders.
He could still surprise many shareholders and walk out the door to join Philip Green on the beach.
[img r]Glynndavis3.jpg[/img][i]Glynn Davis was previously a fund manager in the City, and has since become a business journalist specialising in the retail sector. He contributes to a range of publications including national newspapers and the specialist trade press.[/i]
