A European private equity business which wants a bigger say in how Topps Tiles is run, says the retailer has stagnated under its current leadership and is calling for chairman Darren Shapland to be ousted.
Austria-based MS Galleon GmbH says growth has stalled while competitors such as Victoria Plumbing and Tile Mountain have thrived post-Covid – despite Topps taking a bigger share of the UK market.
MS Galleon – which has grown its stake in Topps from 21 per cent last May to almost 30 per cent today – says it believes Topps has failed to exploit online opportunities under Mr Shapland and wants to oust him at the AGM on Wednesday, January 18, and bring in two new directors.
In a statement issued this morning it said Mr Shapland, who became non-executive chairman in 2015, should be removed “immediately”, saying Topps’ financial performance has “declined significantly” under his leadership.
It said: “The company is ill prepared to deal with an increasingly competitive UK market.”
MS Galleon is chaired by Polish billionaire industrialist Michał Sołowow, and employs around 16,500 people in 30 businesses. It has 250 shops specialising in products such as tiles, bathrooms and furniture.
Its portfolio includes European tile maker Cersanit – the third biggest European manufacturer of tiles, sanitary ware and bathroom furniture – which it wants to see supply more stock to Topps.
Management at Leicestershire-based Topps – which has turnover of around £250 million and more than 300 stores – say sourcing more from Cersanit would reduce competition and not be in the interests of the business or its shareholders.
Topps has also said MS Galleon GmbH is planning a UK launch of its own tile retailer Nexterio, which has more than 40 outlets in Poland, which would put it in direct competition.
MS Galleon said it proposed launching Nexterio in the UK as a joint venture with Topps in August 2022, but said the Topps CEO Rob Parker turned down the offer.
In a statement, MS Galleon managing director Piotr Lipko said: “Rather than using company resources to attack its major shareholder, Topps Tiles should focus on turning around the company from over seven years of deterioration.
“Topps Tiles should concentrate on reversing the declining margin, growing its market share and improving falling profits.
“The objective of MS Galleon’s requisitions is simply to improve the performance of Topps Tiles, increase its market value, and maximise returns for all shareholders.”
In a list of grievances, it said between 2016 and 2022, Topps Tiles’ revenues increased by just 2.4 per cent from £215 million to £247 million – whereas Victorian Plumbing was up almost 14 per cent, from £124.4 million to £269 million.
It added that its Cersanit tile maker had always been driven by market conditions in its dealings with Topps Tiles, while Nexterio was “an opportunity, not a threat” to Topps.
Responding, a Topps Tiles spokeswoman said: "The board continues to believe that MSG’s proposals would expose shareholders to a number of serious conflicts of interest between MSG’s role as a shareholder, supplier and potential competitor to Topps Tiles, and are not therefore in the best interests of the company and its shareholders as a whole.
“MSG has failed repeatedly to address the substance of this critical conflict of interest issue and it does so again today.
"In attempting to remove the chairman and appoint two of its own representatives to the board, MSG is simply seeking to increase its control over the business.
“We welcome the strong support received from other large shareholders for the Board's position, with shareholders representing over 41 per cent of the company's voting share capital having confirmed their intention to vote against the MSG resolutions."
