Sports Direct boss Mike Ashley is facing defeat in his battle to install a representative onto the board of the online retailer Findel, in which he bought a 19% stake.
Ashley has called an extraordinary general meeting on Monday of Findel shareholders, who will vote on the appointment of Ben Gardener, a Sports Direct employee, to the board.
Findel’s board has already advised shareholders to vote against the appointment of Gardener, who is linked to the controversial administration of part of Sports Direct’s USC chain.
Related: Revealed: how Sports Direct stripped USC assets before it collapsed
In a letter to shareholders, it said the appointment would “compromise the independence of the board and would provide information and voice to one shareholder in preference to other shareholders”.
Major shareholders Toscafund, Schroders and River & Mercantile, who together control 43.9% of Findel, have already agreed to vote against Sports Direct.
Their support for Findel’s board means Sports Direct is unlikely to secure the 50% backing it needs to install Gardener.
The battle with Findel comes as Ashley’s business faces heavy criticism over employment practices at Sports Direct following revelations made by the Guardian.
Sports Direct boss Dave Forsey has also been charged with a criminal offence in relation to redundancies which occurred when part of the USC fashion chain was put into administration.
Findel said 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.
“It is not appropriate to appoint a [Sports Direct] nominee director to the board given [Sports Direct’s] commercial interests in the company’s business,” the board said.
“The most appropriate way for [Sports Direct] to gain control of the company’s capabilities is to make a fair offer for the whole company. Were [Sports Direct] to purchase the company from shareholders, it could make appointments to the board and control the company’s business.”
Sports Direct snapped up its 19% stake in Findel in September. Its shares soared on speculation that Ashley was after Kitbag and in anticipation of a bidding war, as Findel said it had already agreed terms on a sale with another party.
In early November Sports Direct put out a notice requisitioning an emergency shareholder meeting to vote on the appointment of Gardener.
Sports Direct has a history of taking strategic stakes in other retailers in an attempt to gain influence over their boards. Earlier this year it secured space within Debenhams’ department stores after taking out a put option on shares in Debenhams, which gave it influence over a 16.6% stake. Adidas, JD Sports and now defunct JJB Sports have also been targeted in the past.
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