Debenhams' offer price too low, says City

The proposed acquisition of department store group Debenhams by venture capitalists has come under criticism from the City.

Influential retail analyst Richard Ratner of Seymour Pierce believes Permira's 425p per share offer is too cheap. He is convinced that Debenhams could reward shareholders more handsomely by adopting an alternative approach.

Ratner was 'amazed' that the management had not borrowed against assets to raise£700 million and pay a dividend to shareholders of 200p per share.

'The board is missing the opportunity to create shareholder value far in excess of what has been indicated by the initial bid,' said Ratner.

Standard Life head of UK investment at Investments David Cumming was also concerned. He said: 'The current bid is clearly too low.'

A Debenhams spokeswoman said Ratner was entitled to his opinion, but it was unlikely a public company could borrow so much without depressing its share price.