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Tuesday, 19 February, 2002, 10:36 GMT
Takeover row brews at Moss Bros
Moss Bross storefront
The pinstripe look is out of fashion
Menswear retailer Moss Bros is fighting off a takeover approach from Shami Ahmed, the entrepreneur behind the Joe Bloggs label famed for its baggy jeans.

The group said the price of 40p a share, which values the upmarket outfitter at 36m, was "wholly inadequate".

Moss Bros also stressed the deal could have a "negative impact on staff, suppliers and franchises" and cast doubt over Mr Ahmed's funding power.

The suit shop fell heavily into the red last year as more casual dress codes at work led to a slump in sales.

Funding dispute

There is also a row brewing with the stock exchange over the status of the approach.

Mr Ahmed is likely to face scrutiny from the Takeover Panel after the retail group complained to the regulator yesterday, according to the Financial Times.

Moss Bros claims the approach does not constitute a formal bid because it is subject to due diligence which Moss Bross will not allow.

"It's not a bid... it has to be committed funding, not conditional," the paper quoted the group's chairman Keith Hamill as saying.

But Mr Ahmed, who has already built up a 5% stake in Moss Bros, said he had debt and equity finance, including the backing of HBOS.

Shake up

Following the rejection, a disappointed Mr Ahmed said "the company's recent trading history has been lamentable".

"It has been littered with strategy and management changes, profit warnings and increasing losses," he said.

Moss Bros fell into the red last year to the tune of 16m after being hit by the costs of a drastic shake-up of its shop portfolio.

It closed stores, cut jobs and revamped some lines with more casual clothing.

It is keeping its Cecil Gee and Hugo Boss chain, but converting most of its Suit Company, Savoy Taylors Guild and Blazer outlets to a new format selling at "affordable" prices.

Family stakes

On Monday, Moss Bros said it had rejected a takeover approach but refused to name the suitor.

It also appointed a new chief executive, Adrian Wright, an experienced manager in the retail sector.

And the board restated its belief in its existing strategy.

"The board is confident that the best and most certain approach to achieving value for shareholders is to support the new management team in returning the business to profitability and restoring its previous levels of financial performance," said Moss Bros.

To succeed, any bid would need the backing of the Moss and Gee families who control 38% of the company between them.

Moss Bros shares gained 6% to 40p on Monday over speculation of a bidding war, and were holding steady on Tuesday morning.

See also:

18 Feb 02 | Business
Moss Bros turns down bid
02 Oct 00 | Business
Moss Bros racks up loss
26 May 00 | Business
Moss Bros to axe stores
13 Apr 00 | Business
Arcadia ditches jobs and shops
18 May 00 | Business
UK retail sales fall
23 May 00 | Business
M&S confirms gloom
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