Barry O'Halloran

Any new Musgrave bid for the retail franchise Londis in the UK is likely to be scrutinised by a board with significantly strengthened shareholder representation, it emerged yesterday.

The Irish grocery group withdrew its £40 million sterling (€57 million) bid for Londis before Christmas after the UK-based group's board withdrew its recommendation. A group of shareholders protested at its offer to pay four executives £20 million and £10,000 each to the shareholders, who are its shop-owning franchisees.

Following that and a number of rival bids, including one from Iceland parent, the Big Food Group (BFG), Londis's annual general meeting appointed accountants KPMG to carry out a review of the business. This is due to end next month. It also intends appointing two extra non-executive directors to the board with the aid of the advisors.

As a result, the number of directors will rise from five to seven. A spokesman said the newly-constituted board would probably include five shareholders. It currently has three, including the chairman, Mr Peter Williams.

"They are looking at adding two new members to the board, and they will probably be drawn from the membership," the spokesman said. "There will be significantly strengthened retailer representation on the board." Traditionally, the Londis board has been made up of two executive directors, and two non-executive directors and the chairman from its 1,956 shareholders.

None of the interested parties can bid for Londis during the review period. If KPMG recommends that the business should be sold, which sources yesterday said was likely, the race to land it will begin again.