SMALL investor group ShareSoc is poised to launch a campaign against the attempted management buy-out of macaroon house Lees Foods for £5.6 million.
Shareholder David Stredder, who is also a ShareSoc director, argues that Lees, famed for confectionary such as snowballs, is worth upwards of £3 a share and that the £2.30 bid on the table is tantamount to "stealing away" the company.
The Herald revealed yesterday that institutional investor Unicorn also believes the cash offer from Lanarkshire-based Lees directors undervalues the company.
Mr Stredder told The Herald: "I would have valued this company if someone external was taking a look at it, at something north of £3.
"That suggests they are stealing it away.
"It listed seven years ago at £2 a share. So an exit at 230p doesn't seem a very good return. It seems opportunistic."
An offer at £3 would value the Alternative Investment Market-listed company at around £7.4m.
The 230p a share offer was a premium of 2.7% to the closing price of 224p last Thursday.
Mr Stredder said that ShareSoc, which represents private investors, will "almost certainly" campaign against the current offer from the directors' vehicle Randotte if it finds that a large number of minority investors are unhappy.
An alliance of disgruntled small shareholders potentially presents Lees Foods with a problem because its directors are barred from voting on the offer due to their interest in the deal.
They have irrevocable undertakings of support from investors holding 20.2% of the company, which is scaled up to 40.9% once the directors' interests are removed. But it requires 75% support to get approval.
Among those signed up to the deal is oil industry entrepreneur Alasdair Locke who has a 10.5% stake in Lees.
However, shareholders who have backed the offer can opt out if the company receives another bid above 230p a share.
Fund manager Unicorn, whose Aim venture capital trust has a 5.3% stake in the company, has already said it believes Lees is worth "considerably more" than the offer on the table.
There is concern that, after the death of independent chairman Chris Greig in February, there is no-one on the board with a mandate to look after investors' interests.
Mr Stredder, who has owned shares in the company for several years, said: "It seems unusual timing. We do not have a reappointment of someone to take over (from Mr Greig) and no-one fighting for shareholders on the board."
He is sceptical about the need for Lees to become private in order to attract finance, noting that it has substantial cash on its balance sheet.
As of June 30, the company had net cash of £1.1m and recently picked up £500,000 after winning a tax dispute against HM Revenue & Customs.
Randotte has obtained funding worth £5m from Lloyds Banking Group for its takeover.
Lees didn't respond to a request for comment.
Lees's largest shareholder with a 22.3% stake is a company called Coven, which is controlled by Lees director and food and drink industry veteran Klaus Perch-Nielsen who bought the company with Raymond Miquel in 1993.
Mr Miquel's son Clive, who is the current chief executive, has a 4.2% stake. Mr Perch-Nielsen has a personal stake of 9.8%, finance director David Simon 5.8%, Nadia Miller 3.9% and Bert Croll 1.8%.
Lees shares were unchanged at 231p.
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