Today Lord Harris of Peckham finally launched his bid to take the listed retailer back into private hands. The peer is offering £850m, or £12.50 per share, to buy back his own company – a premium on last week’s share price, though almost £1 lower than when the takeover talks were announced.
Clearly Lord Harris believes that the cost-cutting he has already started to carry out (100 jobs have been trimmed since January) can be done more easily away from the glare of the public markets. For a man who grew the company from a three-store chain into the biggest private retailer of its type in Europe, it can’t be easy to have to justify his every move to a large shareholder base.
Going private would also eliminate the need for him to talk through Carpetright’s results (and justify its lacklustre share price performance) on a quarterly basis – which would be particularly useful if trading conditions deteriorate, as Harris expects.
In a trading statement also released today, Carpetright said sales were up 10% in the first half, while store numbers also increased. However, like-for-like sales were down in both August and September, as the UK economy started to feel the impact of the credit squeeze.
Either way, the retailer is facing an uncertain future – not least because fewer people are buying carpets these days (Carpetright has already diversified into wooden flooring, but Laminateright just doesn’t have the same ring to it).
Lord Harris will now begin due diligence, after the independent board of directors primly agreed ‘to grant the potential offeror access to the Company’. Though as the chairman, chief executive and biggest shareholder, we doubt he will find too many surprises in there…