DFS backs Kirkham's new bid

LORD KIRKHAM, chairman of DFS, has added a further £30m to his indicative offer for the furniture group he founded, winning a recommendation from the independent directors.

At the same time the board said it will continue to seek offers above Kirkham's £475m terms, although no rival bidders have yet emerged.

Kirkham first indicated he wanted to take the group private in March, but his 415p price was dismissed by the rest of the board. Now he has raised that to 437p, plus the interim dividend of 7p, taking the terms to 442p. The news sent DFS shares 16 1/2p higher to 442p.

In addition, Kirkham has agreed that shareholders will have the right to share any payout from the group's long-running court battle for a VAT rebate. This could be in excess of £60m before tax and expenses, but DFS cautioned that there was no certainty the rebate will be received.

The independent directors said that in deciding to allow Kirkham to go ahead with due diligence, they have 'taken into account the trading performance and prospects for the longer-term profitability of the business and the continuation of Graham Kirkham's important contribution to the success of the company'.

Kikham had indicated that if his bid approach were rejected, he might retire on his 60th birthday in December.

DFS has been hit by growing competition in the furniture industry and last month warned that full-year profits will fall short of most market expectations, at around £51m against £56.4m the previous year.