Shares digital

The decision by the Moss Bros (MOSB) board to keel over to Baugur's indicative bid of 42p has caused angst to members of the Gee and Moss families, who vetoed an offer at 80p only a year ago.

However, both David Moss and Michael Gee, who are spearheading the families' efforts to thwart the bid, may be unrealistic and influenced by mistaken nostalgia and personal bitterness. David Moss was sacked as an executive director six years ago as was Rowland Gee, Michael's brother.

Moss Bros is currently making virtually no money, reflecting the problems of the menswear sector. Conditions can only worsen in the short term as some competitors may go under and flood the market with cheap suits. This is why the board is willing to sell out at this level, and why the institutions on board are unlikely to back the families.

Michael Gee has suggested he will try to acquire the bulk of Baugur's holding at a premium to the current price to frustrate the bid. But this is an offer he would not make to other investors, which could alienate him against other shareholders, and also ignores the fact that Baugur does not want to sell. Although the shares currently trade around 45p, given the company's prospects the bid looks fair.

Meanwhile, speculators should also keep an eye on Debenhams (DEB), where Baugur also has a 13.5% stake. A takeover here is not out of the question as a merger with Baugur's House of Fraser would be a logical progression for the two stores.

Shares says: Ignore the nostalgia.

Accept Baugur's bid

by: John Marshall