A Sports Direct store
Findel warned shareholders that Sports Direct was a direct competitor of its online football kit store, Kitbag. Photograph: Dinendra Haria/Demotix/Corbis

Sports Direct has accused Findel of under-delivering for shareholders after its attempt to put a representative on the board of the online retailer was rebuffed.

Nearly 81% of shareholders who voted came out against a resolution to appoint Ben Gardener at an emergency shareholder meeting in Manchester on Monday.

Sports Direct owns a 17.5% stake in Findel, having cut its investment from 19% last week. But the board won the backing of major investors Toscafund, Schroders and River & Mercantile.

The voting figures from the meeting indicated that Sports Direct was the only major shareholder to back Gardener.

Findel’s board advised shareholders to block the appointment, saying that Sports Direct was a direct competitor of its online football kit store, Kitbag, and was also interested in buying its Express Gifts division, which sells homewares, toys, games and other gifts online.

In an angry statement issued after the vote, Sports Direct said: “Findel should focus on trying to run its business more successfully and not reject offers of specialist assistance.

“All the Findel business segments could have been improved for the benefit of all of its shareholders with the retail expertise of Sports Direct. Mr Gardener could have helped in all these regards and would have been a positive addition to a board that Sports Direct believes has under-delivered for its shareholders.”

It said the company had been without a chief executive since March and had not yet been able to agree terms of a sale of its Kitbag division despite announcing a transaction in September.

Sports Direct said it had acquired its shareholding in Findel on the understanding that this would be “of benefit to and welcomed by Findel and its other major shareholders” and that Toscafund and Schroders were in support of Gardener’s appointment.

In response to Sports Direct’s criticism, Findel said: “Over the last five years the new leadership team of Findel has been very focused on restoring shareholder value and the group is on track to record another significant step up in profit before tax in the current financial year.”

Findel’s board told shareholders ahead of Monday’s vote that the most appropriate way for Sports Direct to influence its business was to “make a fair offer for the whole company”.

It is not clear whether Sports Direct, which has a history of taking strategic stakes in related companies including Debenhams and JD Sports, will now make a bid. The company is under pressure to make acquisitions to meet its growth targets and some analysts believe Findel would provide a fitting target.

Shares in Findel soared in September when Sports Direct first revealed its stakeon hopes that the sports retailer would make a bid. Findel is already in advanced talks over the sale of Kitbag to another unnamed party and investors hoped Sports Direct’s stake-building signalled a potential bidding war.

Matthew McEachran, a retail analyst at N+1 Singer, said Sports Direct would probably not buy Kitbag because its suppliers did not want their goods sold via owner Mike Ashley’s business and could terminate their agreements under change of ownership clauses if he won control.

He said Findel was nevertheless an attractive target for Sports Direct as its Express Gifts division had a well-developed financial services operation which could provide potential synergies and new potential avenues of growth.

“It is difficult to second guess Sports Direct but the most logical step might be a bid for Findel in order to acquire Express Gifts. It could bring a huge strategic step change. At the moment there is a lot of investor concern about growth at Sports Direct. It is falling short of its targets and it needs to make acquisitions. Findel looks like it could fit the bill,” he said.

[Source:- the gurdian]

By Adam