LONDON — Deutsche Bank is standing firm.

The bank said it would hold its ground against Dickson Poon in order to keep Harvey Nichols trading on the London Stock Exchange.

As reported Monday, Poon has fashioned a second bid for the control — and eventual delisting — of the Knightsbridge retailer. That bid will be finalized by early next week and shareholders will have 21 days to vote on it.

"The first offer was not attractive to us, nor is the second," said Ruth Keattch,a spokeswoman for Deutsche Bank, the store’s largest institutional investor. "No matter how the second vote turns out, Dickson Poon’s board must recognize that a decision to delist Harvey Nichols must be made in the interest of all shareholders. Delisting is not in our interests and it would be a difficult recommendation for the directors of a company to make under these circumstances."

Spokesmen for Dickson Poon and Harvey Nichols declined to comment for this story.

Poon, who owns 50.1 percent of Harvey Nichols, wants to buy the remaining 49.9 percent and delist the company. As expected, his first offer — at $3.85 per share for the rest of Harvey Nichols — was defeated during a shareholders’ meeting Monday, thanks chiefly to opposition from the bank. Market reaction was positive, with the stock closing up 2.3 percent at $3.74. (Dollar figures are converted from pounds at the current exchange rate.)

Poon believes the store is not realizing any material benefit from its listing because of its small market capitalization and relative stock illiquidity.

To push his offer through, Poon needed approval from shareholders representing 75 percent of the stock held by the public. During Monday’s vote, 55.2 percent of shareholders voted in favor, while 44.8 voted against.

Deutsche Bank holds 15 percent of the company’s stock, the equivalent of 30 percent of shares currently traded on the London Stock Exchange. The bank had said from the outset that Poon’s proposed price was too low, and that it wants to hold on to its shares for the long term.

Poon has said $3.85 per share represents good and certain value for shareholders in turbulent equity markets. The bank said it would be willing to accept a price of $5.39 — 1 pound, or about $1.54 at current exchange rates — more per share than Poon is offering.Poon’s bid represents a 35.5 percent premium over the closing price of $2.84 on Sept. 17, and puts the total capitalization of Harvey Nichols shares at $212 million.

Poon’s alternative proposal features the same price of $3.85 per share, but would only require approval from shareholders representing 50 percent of the stock held by the public. That means that Deutsche Bank would no longer be able to block the move.

But here’s the hitch: Under the new proposal, Poon would also be willing to settle for ownership of 75 percent of Harvey Nichols — rather than 100 percent. Sources say that with 75 Continued from page 2

percent of shares in his pocket, Poon would render Harvey Nichols so unattractive to remaining shareholders that they’d be forced to sell their stakes.

"Let’s face it — who wants to be a minority shareholder in what is essentially a privately owned company?" said one financial source. "With 75 percent of Harvey Nichols, he may be able to force Deutsche Bank’s hand."

Keattch said: "We’re still exploring issues around delisting."

There’s another development that might unfold before Poon is able to pocket his 75 percent of the company. At this point, any investor can step in with a higher offer than Poon’s $3.85 per share. And while Poon still controls 50.1 percent of Harvey Nichols — making a full takeover impossible — the company is still vulnerable to offers from outside.

"It’s a company with so much growth potential, I wouldn’t be surprised if another investor steps in," said one financial source.

Harvey Nichols sells top designer brands in women’s and men’s wear, beauty, home furnishings, food and its own Harvey Nichols apparel brand through its London flagship and its other stores. The Harvey Nichols Group opened its first "boutique" store format in Birmingham last year and continues to seek sites for rollout of this format. It was listed on the London Stock Exchange in 1996.

Poon’s firm Dickson Concepts is listed on the Hong Kong exchange and has over 400 stores in southeast Asia and China, including Coach, Tod’s, Bulgari, Chopard, Charles Jourdan watches, Tommy Hilfiger, Ralph Lauren and its Polo Jeans division, Benetton and its Sisley division, Brooks Brothers and Seibu department stores outside Japan.

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