Speedy end to Debenhams battle

A QUICK end to the bid battle for department stores group Debenhams was signalled this evening by the stock exchange's Takeover Panel. It has set an accelerated bid timetable that could lead to a conclusion by Christmas.

The panel said that, if required, an open auction would start on 31 October and, also if required, the bidders would have to submit final, sealed bids by 4 November.

The group is being fought over by venture capital firms Permira, which has bid £1.54bn, and CVC Capital Partners/Texas Pacific, which is offering £1.66bn.

Permira is now expected to raise its terms from 425p a share to around 475p, valuing the group at more than £1.7bn.

Earlier today Debenhams reported continued growth in sales and profits and said it had made 'an encouraging start' to the new financial year. At the same time, chief executive Belinda Earl revealed the long-running bid battle has so far cost £17.4m, largely in advisory fees, and costs are still mounting.

She pointed out, however, those would be paid by whichever side wins the tussle, adding: 'The costs should be looked at in the context of the value that has been added to the company. They work out at 5p a share, while our shares have more than doubled over the past 12 months, from 227p to 470p.'

Excluding bid costs, profits for the year to 30 August rose 9.6% to £168.4m, in line with City expectations. Total turnover climbed 6.7%, to £1.8bn, with a like-for-like advance of 3.7%. That has slowed to 2.7% in the six weeks to 11 October, although Debenhams is still outperforming the market. Margins increased 0.4 percentage points over the year and by 0.5 points in the opening weeks of the new year.

'We are gaining market share from across the High Street,' Earl said. 'Womenswear did very well at the back end of the summer and we have made a very good start with our autumn ranges.'

The management team has been working with both bidders, but has kept its eye on the ball, Earl said. 'These results are a testament to the strength of the business. We have stood up to intense scrutiny,' she added.

Earl and finance director Matthew Roberts have been permitted to work with Permira, a move that has sparked accusations of a conflict of interest. They will stay if Permira wins, but may not be part of CVC Capital and Texas Pacific's plans.

'They have been less clear about what our roles would be if they win, but we fully respect that,' Earl said.

As these are almost certainly the last set of results from Debenhams in the guise of a public company, it is not planning to pay a final dividend.