City sold Arcadia too cheaply,' says Standard Life

City institutions massively undersold Arcadia, the Top Shop to Dorothy Perkins chain bought by Philip Green for £850m last year, according to one of the UK's most respected fund managers.

The damning verdict from David Cumming, the head of UK equities at Standard Life Investments, follows Arcadia's announcement last week of spectacular full year results. Operating profits at the retail chain, which Green bought in October 2002, rose by 95.8 per cent in the year to August 30 to £227.9m on sales up by 3.3 per cent at £1.8bn.

Cumming sees the results as proof that investors were short-changed. "These results confirm that Arcadia was sold too cheaply by the City," he said. Standard Life was one of a number of City institutions that raised concerns last year about the level of Green's bid. The fund manager claimed at the time that the price should have been closer to 500p a share, rather than the 408p eventually paid by Green.

Green dismissed the claims, insisting that he "paid the market price".