Blockbuster bid to win Debenhams

VETERAN retailer John Lovering's consortium has raised its bid for Debenhams to £1.7bn in a pre-emptive strike aimed at knocking out its rival Permira.

It has upped its offer from 455p to 470p per share, smashing Permira's original 425p bid.

Lovering, whose bid vehicle is called Baroness Retail, secured a recommendation from the Debenhams board on Wednesday night.

Venture capitalist firms CVC Capital, Texas Pacific and Merrill Lynch's private equity arm are funding the bid. The higher offer should bring to an end the protracted bid process which formally kicked off in May.

Permira will struggle to top the Lovering bid. 'This looks like a killer blow,' said one source close to Permira.

One of its backers Goldman Sachs said this week that it did not want to put any more money into the venture.

Debenhams chief executive Belinda Earl will be disappointed if Permira walks away. She was due to stay on as chief executive when the retailer bowed out of the stock market. Retail veteran Stuart Rose had agreed to become chairman.

Lovering does not need Earl to remain, though she may stay on for a short period. He has already lined up former Homebase chief executive Rob Templeman and former commercial director Chris Woodhouse to lead his team. They made a fortune from turning Homebase around and selling it on to GUS.

Earl will not be badly off. She will walk away with £ 3m-plus in shares and options. Debenhams finance director Matthew Roberts will get nearly £2m.

Chairman Peter Jarvis is eligible for a £220,000 pay-off. But that is nothing compared to the riches that Earl and Roberts could have earned by taking the group private.

If they had played their cards right, their personal equity stakes could have been worth more than £10m.