Woolies investor demands cash back

AMERICAN hedge fund manager Elliott Associates is demanding that Woolworths returns cash to shareholders after the collapse yesterday of an £837m bid from Apax Partners.

Elliott, which holds 7% of Woolies' shares, says that the company should put itself up for auction, sell off its entertainment arm or take on debt to fund a cashback payment to investors.

Shares in Woolworths dived yesterday in the wake of the Apax decision, losing 13p to close at 41p, as some 448m shares - almost a third of its entire share capital - changed hands.

Analysts said Elliott is sitting on a huge loss after deciding to exploit the potential gains to be had from an Apax purchase at around 50p-55p.

In an open letter to Woolworths, Elliott said that the board needed to take action to transform the business, either through a formal auction or by the sale of certain parts of the operation.

But Woolworths have rejected the plans, insisting that the recent bid process had been an auction and it had no plans to look for other interested buyers. Apax was the only potential bidder and the lack of other interest is believed to have been one of the factors that led it to pull out.