Musgrave's £60 million (€89.5 million) bid for Londis in the UK faces fresh challenge from a team of former convenience store executives who say they can offer a better deal to Londis shareholders.
But the Londis board has flatly rejected its proposal, saying it will continue to favour the Musgrave offer after recommending it last month. The board said it had seen the new approach before and had rebuffed it because it was not in the firm's long-term interests.
The Lancelot group, led by former T&S Stores executive Mr Geoff Purdy, said it was preparing an offer for Londis with the backing of Nordic bank Kaupthing.
"A purely financial buyer brings nothing to help Londis address the challenges of a fast-changing industry," the board said, adding that it would remain focused on shareholders' long-term interests.
Lancelot offers to match Musgrave's £60 million bid but proposes to allow the 1,900 shopkeepers with Londis shares to retain ownership of 60 per cent of the company.
The deal would be structured as a management buy-in, with Lancelot proposing to supply a chief executive, finance director and two other senior executives to Londis. Lancelot says it will pay each shareholder up to £31,000 in a cash/share deal but has not yet established how this split will be defined. Musgrave has offered the same amount in cash, with no share alternative.
Mr Purdy, who was group buying and marketing director of T&S for 10 years before it was taken over by Tesco in 2003, said Lancelot offered shareholders "the best of both worlds".
"They will not only receive good value for their part of their share of the business but also, importantly, they will retain a majority stake in the business so they can benefit from the rewards of the turnaround of the firm."
The new bid is supported by Londis shareholder activist Mr Adrian Costain, whose campaign was instrumental in forcing the withdrawal of an earlier Musgrave offer at the end of last year. Mr Costain had argued that the previous deal was not in the best interests of shopkeepers.
"I am aware of the reputation of the proposed new management team and I am very impressed," he said yesterday.
Musgrave did not comment on the latest development but the firm is expected to proceed with seeking the necessary High Court approvals for a scheme of arrangement on the Londis takeover, regardless of the Lancelot move.
Musgrave and Londis will begin a roadshow to answer shareholders' questions today. An offer document will be despatched as soon as the legal requirements have been fulfilled. This is expected to happen over the next few weeks.
