The hedge fund has built the stake as opposition grows to Kirkham’s bid, which a number of shareholders have vowed to block.
“We told them: no thank you,” said one of the company’s largest shareholders. “It is a good company, with good management. We see long-term growth and want to stick with it.”
Sources understand that Polygon has acquired a 3% stake in DFS, held through a contract for difference (CFD) — a tax-efficient derivative that allows the firm to benefit from a rise or fall in the share price.
Polygon is very active in the London market. In recent months it has attacked the restructuring plan at British Energy under which the bondholders will take control of the group. But BE’s advisers have criticised Polygon’s tactics. “The activities of one or two hedge funds could risk the deal for retail shareholders,” said one.
Last year Polygon led shareholder opposition at Monsoon, the fashion retailer, after Peter Simon, the chairman and founder, launched a controversial put option that increased the Simon family’s stake to 75.5%.
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Simon has since called on the Financial Services Authority, the City watchdog, to investigate the activities of Polygon after it emerged that, despite its vocal opposition, the hedge fund owned only one share in the retailer.
Shares in DFS fell last week to 434p over fears that the deal may not proceed.
Several analysts said Kirkham’s offer was too low. Scott Ransley at DKW said: “If the 445p offer is not raised, we believe core institutional shareholders will reject it.”