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Sir Fraser dismayed by AWG refusal to rsell back Morrison

Utility giant throws out £122 million offer for housing an nd development arm by former Morrison chief executive being sued for providing 'misleading' profit forecasts

SIR FRASER Morrison made a £122 million bid last month to buy back the housing and development arms of the business he sold to utility giant AWG.

But the offer was dismissed out of hand by chief executive Chris Mellor and the rest of the AWG board. Sir Fraser, who was Morrison chief executive when AWG paid £263 million for the firm in September 2000, blamed personal antipathy and his upcoming court battle with the utility firm for the rejection.

Last week AWG launched a High Court writ against Sir Fraser and another former Morrison director, Stephen McBrierty, claiming the pair had misled it over the size of Morrison's profits at the time of the deal. AWG is suing Sir Fraser and Mr McBrierty for £130 million.

Sir Fraser said: 'I made the offer on a Friday and it was rejected the following Monday. That's how long they took. It did smack of 'anyone but me'.

'If they had accepted my offer they could have been left with exactly what they wanted - the utilities business.'

Sir Fraser also admitted that he is interested in buying back the construction arm but has yet to make a formal offer.

He added: 'They want £130 million from me for nothing and what I was planning to do was pay more than £120 million for substantial assets. I don't think the rejection was in the personal interests of AWG shareholders.'

But an AWG spokeswoman said Sir Fraser had not formally tabled a bid and added: 'He indicated a willingness to pay but the price did not provide the required level to AWG.'

The war of words between Sir Fraser and AWG has intensified in the week since the 90-page writ was delivered. It was served just days before AWG announced it had rejected a £900 million takeover bid from a team which includes Sir Fraser's brother, Gordon. The team led by German bank WestLB said it will press on with its approach.

Speaking about the lawsuit, Sir Fraser said: 'They have made preposterous allegations which will be demonstrated to be wrong in the court.'

Along with Gordon, who is not being sued, Sir Fraser pocketed £57 million in cash and shares when AWG took over the firm, giving the Morrison family a 3 per cent stake in AWG.

But Sir Fraser, who has hired City law firm Dechert and a public relations team to help him in his battle, admitted he will have to dig deep into his personal fortune, estimated at around £50 million, to fight the claim. He said: 'It will cost AWG and ourselves a substantial sum.

AWG is not going to get £130 million because I haven't got that sort of money.'

On the day of the writ Sir Fraser blamed mismanagement by AWG for the problems at Morrison and this week he heaped further scorn on Mr Mellor and AWG's board of directors.

He said: 'The Morrison name has been destroyed which causes me great distress. Morrison has been led by people who don't understand the construction industry.'

Sir Fraser, who was due to have become a non-executive director at AWG after the deal was signed - but never did - claimed he had been sidelined and had all ties with Morrison severed within months. He said: 'I was squeezed out.

I and others left the company relatively quickly. AWG ran the business after the takeover.' And he added it was 'frankly incredible' that Morrison's new owners had not called on him to help with the running as they had pledged.

AWG claims Morrison's auditor PricewaterhouseCoopers threatened to resign over a document relating to the treatment of off-balance sheet accounting which 'brought into question the accuracy of Morrison's accounts to March, 2000'.

But Sir Fraser said tensions with auditors are common and the issue was resolved before the sale was completed.

He added: 'PricewaterhouseCoopers did not quit and AWG had everything in front of them before the offer became unconditional.'