Row at Topps Tiles escalates ahead of crunch AGM vote

Row at Topps Tiles escalates as retailer accuses biggest shareholder MSG of sharing contradictory information ahead of crunch AGM vote

  • MSG has called for the ousting of non-executive chairman Darren Shapland
  • The group has a near-30% stake in Topps and wants new board members
  • Topps now says MSG is guilty of multiple ‘conflicts of interest’ 

The row between Topps Tiles and its biggest shareholder has escalated further ahead of a key AGM vote this month. 

Last month MS Galleon GmbH, or MSG, called for the removal of the retailer’s non-executive chairman Darren Shapland.

MSG, which has a stake of nearly 30 per cent in Topps Tiles, demanded resolutions to oust Shapland and appoint two representatives as non-executive directors be included at the company’s annual general meeting on 18 January.

Conflict of interest: Topps Tiles has claimed its biggest shareholder, which is trying to oust its chairman, has provided misleading information to shareholders

MSG has been building its position in Topps since May 2020, when it bought a 4.1 per cent stake. 

It also owns Cersanit, a major European producer of tiles, in addition to having a range of primarily Polish home improvement and tile retailing interests.

Topps Tiles hit back on Friday and accused MSG of providing certain shareholders with information that contradicts previous statements made directly to Topps around the link between sourcing and MSG’s equity interest in the company.

MSG allegedly told shareholders it had recently discussed increasing its share of Topps’ product purchases to 5 per cent.

The FTSE All-Share group said this is ‘not an accurate representation of the entirety of those discussions and directly contradicts statements made by MSG to Topps’.

‘MSG has, on a number of occasions, directly linked the level of its equity holding in the company with the level of supply that it wishes Topps to source from Cersanit. 

‘To this end, one of the proposed directors, Lidia Wolfinger, requested as recently as 25 November 2022 that Topps should source 29.9 per cent of its tile purchases from Cersanit in line with MSG’s shareholding in Topps’.

It added that when it had reviewed opportunities to source products from Cersanit, ‘the frequent conclusion has been that as a supplier it is uncompetitive when compared with other manufacturers of similar products’.

‘The board believes it is incompatible for the proposed non-executive directors to have the target of increasing tile purchases from Cersanit to 29.9 per cent., whilst at the same time acting in the best interests of all shareholders of Topps.’ 

Topps Tiles shares fell 2 per cent to 47p following the statement.

The retailer also believes MSG is preparing to launch its Nexterio tile retail brand in the UK, potentially establishing a direct competitor ‘which would create a further material conflict of interest’.

Keith Down, senior independent director of Topps, said: ’The board has unanimously rejected these resolutions which it does not believe are in the best interests of the Company and its shareholders as a whole. 

‘MSG is attempting to remove the Chairman, who has been leading communications with MSG on behalf of the Board, to allow it to increase its control over the business.’

Topps Tiles says it has now secured further support from key shareholders against MSG’s shareholders, with 41 per cent committing to vote against the resolutions.