Co-op sees off Regan's pounds 1.2bn bid

Andrew Regan abandoned his audacious pounds 1.2bn break-up bid for the Co-operative Wholesale Society yesterday after his City backers pulled out. The decision ends one of the most astonishing takeover attempts of recent years, a battle that pitched a 31-year-old entrepreneur against a 130-year-old movement steeped in the co-operative tradition.

The CWS, however, continued its offensive and commenced criminal proceedings against Mr Regan and a civil action against his financial advisers, Hambros Bank and his lawyers, Travers Smith Braithwaite

The dramatic end came after Nomura International, the Japanese Bank which was providing the Regan camp with pounds 1.2bn of debt finance, became increasingly nervous about the use of stolen documents in the bid. It was also concerned about Mr Regan's explanations of a pounds 2.4m payment to an offshore company two years ago.

It is understood that Nomura had been repeatedly asking Hambros for assurances regarding the cash payment to Trellis International in January 1995.

It sent a letter to Andrew Salmon at Hambros on Wednesday night demanding a more detailed explanation regarding the payment, made to a Swiss bank account number 207766 for assistance in negotiating a contract with the CWS. It set a deadline of 9am yesterday morning for the response. Though a reply was received by the deadline, Nomura did not find it satisfactory.

As it prepared to pull the plug, Mr Regan issued a statement through Galileo, the Lanica Trust offshoot being used for the bid, saying the company would "not be pursuing its proposal".

Mr Regan was said to have behaved "maturely and professionally" as his bid collapsed. He was not available for comment yesterday though one insider said: "It had reached the stage at which Galileo felt it was not right to continue the proposals." One insider said: "He reacted bravely. I thought he was quite impressive."

Mr Regan's withdrawal came ahead of a court hearing today at which the CWS is set to launch a scathing attack on the young entrepreneur. The Co-op promises "to brand Mr Regan and his advisers for what they are and hound them to their graves".

The CWS yesterday launched a barrage of legal action against Mr Regan and his team. It announced private criminal proceedings against Allan Green, its former retailing controller who was suspended last week and has admitted obtaining confidential Co-op documents and passing them on to Mr Regan.

Criminal proceedings have also been started against Mr Regan and his right-hand man David Lyons for aiding, abetting, counselling or procuring the theft and for handling stolen property. A hearing has been set for 28th May in the City of London magistrates court.

The police have not yet been brought in but the Co-op says that "remains an option". The information was laid before magistrates yesterday.

The CWS has also commenced civil proceedings against Hambros and Travers Smith Braithwaite. It claims both firms acted in breach of equitable obligations of confidentiality to the CWS. It is understood that the CWS is also pursuing individuals within Hambros.

A CWS spokesman said: "We have been advised that there is clear evidence that both these organisations acted in breach of an equitable obligation of confidentiality to CWS. They had no credible grounds for believing that there was any legitimate basis for Mr Regan to have any such documents. Nevertheless, they proceeded to make unauthorised use of those stolen documents."

Graham Melmoth, the CWS chief executive, sent yet more curt letters to Mr Regan's advisers yesterday. One, dispatched to Hambros Bank's chairman, Lord Hambro, asked whether Hambros' lawyers were told that Mr Green had stolen CWS board minutes disclosing the legal and financial advice the society had received in relation to Mr Regan's offer.

"If not, what were they told? If they were told the true position, how on earth could they (or you) have concluded that Mr Green was in any way authorised to pass such documents on to Mr Regan?"

It closes: "If your legal advice was so clear and supportive, presumably you will have no difficulty in making a copy of it available for all to see. The CWS has been a victim of a wide-ranging dishonest conspiracy to steal its documents. I mean to get to the bottom of it."

Sainsbury's yesterday wrote to the CWS admitting that it was approached by Mr Regan about the possible acquisition of some of the CWS's larger supermarkets. It says it was provided with a list of CWS stores with approximate sizes and estimates of associated car parking spaces and a list of figures "purported to be sales figures for individual CWS stores for 1994".

It says the details on store sizes were provided by Hillier Parker, surveyors, and were therefore not regarded as confidential. On the sales figures, it sought, through its advisers, Lazards, to obtain assurances from Hambros that the information had not been obtained improperly.

The letter from Sainsbury's group secretary, Nigel Matthews, closes: "I should also like to confirm that Sainsbury's terminated discussions with Mr Regan and his advisers on Wednesday 16 April and have had no further discussions since."

It is understood that the regulatory authorities such as the Department of Trade and Industry and the Securities and Futures Authority may yet decide to get involved in the affair. It emerged yesterday that the CWS had written to the Stock Exchange asking it to investigate whether any shareholders in Galileo traded shares in Lanica with the benefit of inside information.

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