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Index to British press articles on the Fayeds' purchase of Harrods

The Observer's City editor Melvyn Marckus chronicles the events surrounding Tiny Rowland's sale, two days earlier, of Lonrho's 29.9 per cent stake in House of Fraser to Mohamed 'Al' Fayed (for the background to the deal read the Introduction on the index page of Section Six of this website). 
    It is clear that Marckus is unsure as to why Rowland had sold his shares and that he suspected that something had transpired between the two that Rowland regretted.  Taken with Michael Gillard's profile of Fayed appearing in the same issue, reproduced overleaf, Marckus's piece makes a worthy curtain raiser to a fascinating saga.

The Observer 
Sunday, 4 November 1984

The reputation of Lonrho's chief executive 'Tiny' Rowland for being a buyer rather than a seller of assets has exploded with a vengeance.
    News of Lonrho's £138 million sale of its near 30 per cent stake in House of Fraser to the Alfayed Investment Trust -- controlled by the wealthy Egyptian Al-Fayed family -- took the City by surprise on Friday; witness the volatility of House of Fraser shares.
    The message from Rowland is that Lonrho's decision to sell was a direct result of the Department of Trade & Industry's decision to grant the Monopolies and Mergers Commission a further three months to examine Lonrho's relationship with the Harrods store combine.
    In Rowland's words: 'Neither the DTI nor the Monopolies Commission had the courtesy to inform us of this.  We were left to read it in the papers.
    'This was the first and last straw.  If it had not been for that we would still be shareholders.'
    Initial speculation that Lonrho's sale to Mohamed Al-Fayed might not be an arm's-length transaction has also waned.
    A declaration by Al-Fayed that Rowland and Lord Duncan-Sandys (Lonrho's representatives on House of Fraser's board) must promptly resign met a distinctly cool reception at Lonrho's Cheapside HQ.
    The reaction was: 'I have just been re-elected a director with a massive majority.  Some 97.7 million votes were cast in favour of my appointment.  I would rather like to see how the company gets on.'
    Although, on the face of it, Lonrho would appear to have abandoned its quest for control of Harrods, the possibility of a continued involvement cannot be ruled out. 
    Asked if Lonrho might consider future purchases of House of Fraser shares Rowland told The Observer : 'Of course we might.  It would depend on the price.  That means we are buyers and sellers.'
    Friday's £138 million deal, which nets a £72 million profit for Lonrho, was the culmination of an exceedingly swift set of negotiations. 
    Rowland is understood to have telephoned Mohamed Al-Fayed and a meeting took place between the two on Thursday morning at Al-Fayed's Park Lane flat [apartment].
    According to Rowland : 'Other parties showed interest but they were obsessed with such matters as the Office of Fair Trading's attitude and the Monopolies Commission.  Mohamed Al-Fayed and I shook hands and exchanged share certificates for a bankers' draft.  The whole deal only took 48 hours.'
    Professor Roland Smith, House of Fraser's chairman, reveals that merchant bankers Kleinwort Benson first alerted him to the possibility of a deal a month ago.
    According to Smith : 'Kleinwort did not tell me who the party was.  I did not get very excited at that stage.  On Wednesday Kleinwort contacted me again.  I met Mohammed Al-Fayed for the first time on Thursday at our Victoria offices.  He told me that the family was considering purchasing Lonrho's stake and wanted to know if the deal would have our support.'
    Smith adds: 'There was another meeting that evening when most of the House of Fraser board were present.  I think we welcome their arrival.  We want to get on and run the business. 
    The Professor concluded : 'The deal still requires OFT approval.  We will invite two of the Al-Fayed brothers to join the board.  I can't believe Lonrho would want to remain directors.'
    One of the other parties known to have expressed interest in House of Fraser is the Selfridges combine, Sears Holdings, led by Leonard Sainer and Geoffrey Maitland-Smith. 
    Sears is known to have fought shy of the prospect of launching a full-scale £450 million bid for House of Fraser, but the acquisition of Lonrho's share block might have held considerable appeal.  In the event, Rowland and Sainer did not clinch a deal. 
    News of the Lonrho/Alfayed deal sent House of Fraser's shares soaring 44p to 320p at one time on the London Stock Exchange on Friday before a reaction cut the rise to just 10p at 286p. 
    Those dealing in the realm of 320p were clearly looking to imminent takeover developments, but the assurances from Mohamed Al-Fayed that this is a 'long-term-investment' clearly dampened speculative enthusiasm.
    Counter suggestions in the City to the effect that a long-term investment for Mohamed Al-Fayed might span 24 hours can be expected to lead to confused trading in House of Fraser's shares when the market opens tomorrow morning.  But Lonrho's share sale and Mohamed Al-Fayed's' assurances to the Professor have clearly lessened hopes of any imminent full scale bid for House of Fraser. 
    Speculation over the likely relationship between the Professor and his new boardroom colleagues is also rife.  Mohamed Al-Fayed has the reputation of being an exceedingly tough businessman; someone for whom the role of a non-executive director does not come naturally.  In the words of one who knows Al-Fayed well: 'It could be a matter of oil and water.'
    What of the other major shareholders, such as Jack Hayward, who holds two million House of Fraser shares, which he acquired 18 months ago at an average price of around 225p.  Speaking from the Bahamas he said:
    Having been thwarted by the City and the Monopolies Commission I think Tiny Rowland has done the right thing.  He couldn't move so why not take a profit for his shareholders.
    'The first I knew of the deal was when I received a call on Friday from my brokers, Rowe & Pitman.
    'I can't say I am a happy man.  I would like to get out of House of Fraser now.  If I was offered 300p like Lonrho was, I would take it and run.'
    Meanwhile, the deal swells Lonrho's liquidity to some £250 million.  In Rowland's words : 'We are extremely flexible.  We are looking at a great many potential acquisitions, particularly in the United States.  I would not put a penny into UK manufacturing.

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