Storm looming at Monsoon

FASHION chain Monsoon has run into a storm over an attempt to buy out minority shareholders without offering a reasonable takeover premium.

The founding Simon clan's move to buy a further 20% of the company shows how controlling shareholders can ride roughshod over other investors, and sets a worrying precedent for other companies.

The multi-millionaire children of chairman Peter Simon are trying to take advantage of low market values. If their offer succeeds, the family stake would increase to a dominant 92.5% - forcing Monsoon to leave the main stock market.

Critics see this as taking the company private by the back door - without offering shareholders the takeover premium triggered by bids for Selfridges, Hamleys and Debenhams.

Monsoon's big City investors will probably sell out anyway. But where does this leave small shareholders? They are not forced to sell, but few will want shares in a company where they have such little influence.

Peter Simon, whose personal wealth is put at nearly £200m, is claiming he is 'not connected' to the offer. But he could surely exert some influence over his four children - Camilla, Jessica, Zara and George - who stand to inherit vast amounts of his fortune.

The children, through their investment vehicle Stoneycroft, are giving shareholders the option to sell their shares at 140p each. Investors must pay 10p per share for this right, and so would net 130p.

This is well below the 198p at which Monsoon floated in 1998. The shares now sell at 142p, indicating some doubt that the offer will succeed.

The Simon family is not alone in trying to increase its stranglehold. JJB Sports founder Dave Whelan recently tried to take his firm private, and New Look's founder Tom Singh is also considering a bid. The Hargreaves family could try a similar route with Matalan.

What irks Monsoon investors is that they are being offered a premium on only 7% to the share price before the offer. Typical takeover premiums are in excess of 35%.

Simon, who owns 62% of Monsoon, cannot have imagined such riches when contemplating his career plans as a youngster in a hippie commune in Ibiza.

After failing A-levels, he had given up selling frozen fish fingers for Bird's Eye to travel the world. His clothing empire started with a stall in London's Portobello market in the 1970s.

Simon shrewdly spent £1,000 to buy Afghan coats from the Maltese island of Gozo. These made him enough money to open the first Monsoon store in Knightsbridge in 1973. The name was chosen because Simon was born in Sri Lanka during the monsoon.

The group now has annual sales of more than £200m, profits of £32m, and is valued at £254m. It has 300 stores including the Accessorize hats and bags chain.

Simon married Kate in 1977 when the business was still in its infancy, but the marriage ended in the late 1990s. He has always guarded his privacy fiercely, though his ex-wife hit the headlines over a relationship with James Hewitt, Princess Diana's former lover.

During his 30-year reign, Simon has always stayed true to the brand's ethnic roots, importing clothes from Malta and then India and the Far East.

Monsoon's colourful prints, flowing skirts and embroidered fashions have not always been top of the style pages, but the firm has come through tough times and profits are now growing strongly.