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Canadian retail-industry magnate Herschel Segal has won a proxy contest to wrestle control of DavidsTea Inc., setting the specialty-beverage chain on a new course amid limping same-store sales.

The Montreal-based founder of clothing chain Le Château, who started DavidsTea a decade ago with his cousin David Segal, convinced a majority of shareholders to elect his seven-director slate and vote out the incumbent board. At 87, he will now take control of the company.

Davids shares jumped about 3 per cent to $4.05 in trading on the Nasdaq exchange.

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“I would like to thank DavidsTea’s individual shareholders for their support,” Mr. Segal said in a statement on Thursday confirming the result. “During the past few weeks, I have spoken with many shareholders, and their insight into DavidsTea has been very valuable. Now it’s time for the new board of directors to get to work, for the benefit of all shareholders.”

The leadership shift comes after a particularly acrimonious proxy battle between Mr. Segal and the company’s previous bosses. While the former management and directors of DavidsTea said they made every effort to strike a compromise with Mr. Segal, shareholder TDM Asset Management attacked the founder’s “erratic behaviour” and his alleged inability to lead employees in addition to his track record with Le Château.

A lingering lack of support for Mr. Segal could translate into a loss of management talent at DavidsTea, which would make the early days of the new board’s turnaround effort more difficult. Chief executive officer Joel Silver was also elected as as an eighth board member Wednesday but he has quit instead of working with Mr. Segal, according to a statement. Other executives could also leave the company, insiders have said privately.

Mr. Segal’s Rainy Day Investments holding owns a roughly 46 per cent stake in Davids. He was a director of Davids until this past spring, when he stepped down over a disagreement about its future direction.

Montreal-based Davids is coming off losses in four of its past five fiscal years, a period during which it nevertheless managed to double annual sales to $224-million as of Feb. 3. Although the company’s Canadian stores have fared well, a push into the United States has proved costly as Davids struggled to adapt its offerings to American tastes. Same-store sales growth for its entire 240-store network has declined in each of the past three years.

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