Shopkeepers revolt as Londis offer falls

The Irish wholesaler Musgrave yesterday withdrew its £40m offer for Londis amid mounting controversy about £21m payments to four directors of the corner shop chain.

As Musgrave, the owner of Budgens, made it clear that it was willing to restructure its offer, two rebel shopkeeper shareholders have summoned Londis shopkeepers to an emergency meeting tomorrow.

The rebels are trying to form an action group and might try to depose the management team which stands to receive half of any takeover proceeds.

Musgrave had expected that its offer for Londis would be ratified at an extraordinary general meeting of Londis shareholders - who are also shopkeepers - at the end of the month.

That was thrown into confusion on Thursday when Big Food Group, owner of Iceland and Booker, indicated it would table a bid for Londis that aimed to a give a more even distribution of the £40m price.

Musgrave revealed yesterday that Londis initiated the takeover talks in early 2003 with a view to completing a deal by autumn. Instead, negotiations had become "protracted and delays occurred", Musgrave said.

The Irish company also revealed that during its discussions with the Londis board it had not been given an opportunity to negotiate changes to the "legal arrangements" of the executive team.

The executives, including chief executive Graham White, are entitled to 51% in the event of a takeover, which means they would receive a combined pot of £21m.

It is thought that the fine print of the agreements would also allow that payment to be made if they are ousted from their positions. This might make it difficult for the rebels to succeed in efforts to win a larger portion of any spoils.

Big Food Group is arguing that the management should bow to moral pressure and accept £600,000, allowing 2,000 shopkeepers to receive double the £10,000 each offered by Musgrave.