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Hostile Takeover Bid from Dixons Stores Group in 1986

Lukewarm investor feedback to the new Cornerstone Strategy at Woolworths led to changes at the top, with the appointment of new Directors drawn from across the industry. Mair Barnes from the House of Fraser took over as Commercial Director, alongside Mike Sommers at Marketing and Chris Ash. Their challenge was to establish a turnaround formula that could match the exponential growth of sister company B&Q.

Stanley (now Lord) Kalms, Chairman and MD of Dixons Stores Group, who led their hostile takeover bid
Before the ink on their new strategy could dry, it was put to a stern test when Stanley Kalms, the Chairman and MD of Dixons Stores Group launched a £1.8bn hostile takeover bid for Woolworth Holdings. The campaign was managed by his young Finance Director, Gerald Corbett. The ensuing weeks witnessed one of the roughest and toughest takeover battles of the era.

Kalms claimed that Woolworths Holdings was managed by accountants who were driving profits through property sales rather than improving the retailing proposition, particularly at F. W. Woolworth. He claimed that he could do better and would bring his unrivalled retail knowledge to bear on the subject.


The 1986 Board of Woolworths (Jonathan Weeks - Distribution, Mike Sommers - Marketing, Richard Harker - Retail, Colin Brown - Commercial, Don Rose - HR, Geoffrey Mulcahy (Chairman), David Defty - Finance, Mair Barnes - Commercial, Chris French - Systems, Roger Jones - Property and Administration)In the battle attention focused on Woolworths. Kalms accepted Britain's anti-monopoly laws would probably force him to sell the Comet subsidiary, and described sales and profit progress at B&Q as "acceptable".

The Board fought back, lambasting Kalms for mis-managing his previous acquisitions. The Directors argued that Weston Pharmaceuticals, Barclay Fine Chemicals, Dixons Rinck, Barclay & Sons, Ascotts and ACE had all underperformed, and trashed suggestions that Kalms had never closed a store. They went on to note that, while the Dixons man described market conditions as "difficult", newly-acquired Superdrug had made major sales advances in the Woolworth family, in marked contrast to Westons.


A hording on the forecourt at Marylebone canvases investors to reject the Dixons offer for Woolworths, April 1986The Woolworth Group airship toured the City skyline, hoping to persuade investors to reject the Dixons takeover bid


A barage of anti-Dixons publicity declared their offer "inadequate". The poster campaign extended to a huge sign on the forecourt at Marylebone Road counting down the days left to reject the bid.

Just in case Fund Managers in the Square Mile had missed the message, Mulcahy even sent an airship to buzz their rooftops with his message of defiance.


The Woolworth Holdings Defence document set out the case against the Dixons takeover bidA Dixons storefront from 1986


A defence document was issued to shareholders, setting out the early success of a new strategy at Woolworths called 'Focus'. Pilot stores, it claimed, were showing big increases in both sales and profit, with the store environment transformed and upgraded. There were similar successes in both B&Q and Comet.


Employee newspaper, featuring the Woolworths Group managers conference of 11 August 2006


The pièce de resistance of the campaign took place on 11 April 1986, when 2,000 Woolworth, Comet and B&Q Managers gathered at the Wembley Conference Centre, with every TV network invited.

In the speech of his life, Geoff Mulcahy declared "We are the independent, unbeatable team. Dixons say we have no retail experience - 30,000 years’ experience that is what we have in the room today. That loyalty, that total commitment to our strategy, that is what Stanley will find he’s fighting against, and that is why investors should reject this inadequate and misconceived offer." Viewers of the evening news saw the huge audience spontaneously rise and applaud for over ten minutes.

As if any reinforcement was needed, both major commercial TV networks carried carefully-crafted advertisements revealing the new-look Woolworths for the first time. In keeping with City Regulations the ads made no mention of the bid battle, but nonetheless packed quite a punch.

Investors chose to give Woolworth the benefit of the doubt; Kalms failed to get enough to accept his offer. Three years later, in a rare lapse of judgement, a tit-for-tat takeover bid for Dixons was launched and won shareholder approval, but was rejected by the Monopolies and Mergers Commission.


By way of an epilogue, fifteen years later three former Dixons Men took the helm of the demerged Woolworths Group. The Chairman, Gerald Corbett, CEO Trevor Bish-Jones and Operations Director Steve Lewis had all worked for Kalms. And, after seven years of their leadership, the stores vanished from the High Street. The Group had amassed debts of over £300m.