Wickes, the do-it-yourself retailer, has stepped up its fight against a £285 million bid from rival Focus Do It All by promising to return £74 million to shareholders if they vote to keep it independent.
Its final defence document, sent to shareholders yesterday, forecasts that profits before interest and tax will jump 33 per cent, to £28.5m, in the year to December. That is after deducting the £6.4m for it is spending on its renewal programme of upgrading its stores.
The £74m, which equates to 100p a share, will be returned through a tender offer after the bid lapses. That will shrink Wickes' share capital by 25 per cent, which is what cement-maker Blue Circle proposed when it fought off an unwelcome bid from French rival Lafarge.
Bill Grimsey, Wickes' chief executive, admits he was encouraged by Blue Circle's escape because it suggested that investors were no longer prepared to accept low offers for 'old-economy' companies. 'I have said before that this bid is ludicrously low. This [defence document] demon strates just how low it is.'
He denied, however, that the buy-back was a bribe, saying the group had been thinking of it anyway. 'We have a healthy balance sheet,' he added. At the end of 1999 the group had £14m in the bank. It is, however, committed to a £150m programme of openings and refurbishments.
The document spells out Wickes' scope for expanding the business, through openings and via alternative sales methods. Its website will be launched in two July, although it will take two years to become fully operational.
The defence paper tries to answer the questions raised by Focus Do It All last week. It argues that a B&Q Warehouse close by does not significantly damage its stores, and sets out the way its renewal programme is producing significant increases in sales.
Analysts do not expect the bid to succeed at this level. Focus is expected to increase its offer from the current 375p before next Sunday's deadline. Most analysts say it will have to pay at least 500p to win, and some put the figure as high as 600p.
