CVC-Texas top Debenhams bid

PRIVATE equity groups CVC and Texas Pacific today unveiled their long-awaited bid for Debenhams, offering £1.66bn in cash, pipping a rival offer from Permira by £120m.

The bid has the unanimous backing of the department store group's independent directors, who until now had given a qualified recommendation to the Permira offer.

The shares soared 23 1/2p to 458 1/2p, just above the 455p level of the new bid, as punters speculated that Permira may return with a higher offer than its previous £1.54bn.

In a statement minutes after the CVC-Texas bid was tabled, the Permira consortium said it was 'considering its position' and a further statement would be made if appropriate.

One of the retailer's biggest investors, 5% holder Standard Life, said the new offer 'still materially undervalues the group' while 2 1/2% holder Isis Asset Management said: 'This is by no means a knockout.'

Debenhams said its chief executive Belinda Earl, who stands to make more than £3m in option profits from the bid, would support CVCTexas. Earl had been involved in the rival Permira offer.

CVC and Texas, which launched their bid via a new specialpurpose company, Baroness Retail, said their bid was 7.1% higher than Permira's.

Should the bid succeed, Debenhams would be chaired by John Lovering, former Homebase chairman. Baroness is owned 41% by CVC, best-known in the UK as the owner of Halfords bike shops and KwikFit garages, 41% by Texas, owner of Burger King and Ducati motorbikes, and 17% by the private equity arm of Merrill Lynch.

It is financing the acquisition through debt underwritten by Morgan Stanley and Credit Suisse First Boston.

Permira, which also includes Goldman Sachs and Blackstone, stands to receive an £8.5m break fee if it walks away. Baroness will get the same sum if its bid is in turn trumped.

Baroness will no longer get the controversial £6m fee from Debenhams to bankroll its due diligence. The actual tabling of a second bid justified the muchcriticised move, said one Debenhams adviser.

Debenhams' independent directors have irrevocably accepted the bid in respect of their 75,000 shares - £340,000 worth - even if a higher offer is flushed out.