Some of Britain’s biggest retailers are preparing to look over Iceland Foods, if the sale of a majority stake in the frozen food retailer triggers an auction for the entire value supermarket chain.
Wm Morrison is expected to be among those retailers taking an interest in Iceland Foods, according to several people familiar with the process.
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Britain’s fourth-biggest grocer by market share is building a chain of convenience stores, and would be expected to examine any sizeable estates that came on to the market. However, its interest is not thought to have progressed any further at this stage.
It would join J?Sainsbury in eyeing up Iceland Foods, expected to be valued at between £1.7bn and £2bn by the process. Sainsbury said last week that it would examine Iceland if it came up for sale.
“Everyone will have a look at Iceland,” said one senior retailer.
The Resolution Committee of Landsbanki, the failed Icelandic Bank, is in the process of appointing investment banking advisers to sell its 67 per cent stake in Iceland Foods.
If this triggers an auction, Morrison and J?Sainsbury are unlikely to be the only big supermarkets to examine the possibilities of acquisition.
The chain is expected to attract the interest of Britain’s grocers because it represents one of the last chances to acquire a large portfolio of stores. Private equity groups could also be interested.
“There are not many 750-store estates that are potentially available,” said Clive Black, analyst at Shore Capital. “It will carry a lot of interest.”
Asda bought Netto UK last year in a £778m deal, indicating that it is prepared to look at portfolios of smaller stores. Tesco might also be interested, although it could face competition issues.
The Co-operative Group, which bought Somerfield in 2008, is tipped by some senior retailers as a potential buyer. Although it is also expected to look over the portfolio, it is thought unlikely to bid for the whole estate, given that it is still digesting Somerfield.
All parties declined to comment.
The sale of Landsbanki’s stake is complicated by the fact that Malcolm Walker and the management of Iceland Foods own 26 per cent. The remaining 7 per cent is held by Glitnir, another failed Icelandic bank.
Mr Walker is currently climbing Everest to raise money for Alzheimer’s Research UK, and will be away until early June.
Speaking from Everest, he said there would be an “orderly sale” of Landsbanki’s stake.
Last year, he made a £1bn offer for the shares in Iceland that he did not own, which remains on the table, and he has the right to match any deal that is agreed.
Source : Financial Times