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UK Businesses For SaleCo-op edges closer to buying Somerfield
08/04/2008
Somerfield and its suitor, the Co-op, are still in discussions over a potential takeover, despite disagreements over the price. A deal could be struck within weeks.
The Co-op was the only prospective buyer to submit a proposal for the British supermarket chain, before a March 14 cut-off point, despite there being plenty of interest from other parties. Discussions between Somerfield and the mutually owned Co-op had stalled after Somerfield, apparently told the Co-op that it needed to come up with a higher price. Somerfield is thought to have a price tag of £2 billion to £2.5 billion, but bidders say their expectations are too high given the recent crisis in global financial markets, which has made it more difficult for businesses to secure financing. The deal has also been delayed by tensions between Somerfield’s owners, with Mr Tchenguiz eager to sell his third stake given losses on his holdings in J Sainsbury, the Laurel Pub Company and Mitchells & Butlers. However, the private equity groups say Somerfield is trading well and they are not eager to sell. If the Co-op announce a bid, the other bidders for the supermarket are likely to look to strike deals with the mutual for certain stores. Asda would like some or all of Somerfield’s 200 or so bigger outlets. Any bid on its own would doubtless spark a competition inquiry. Tesco have already struck a deal with Somerfield for seven of the stores for £100 million. It is understood that the Co-op offered a price below £2 billion for Somerfield. The Co-op runs more than 2,200 convenience stores and supermarkets in the UK and generates more than £4billion of revenue. |
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© 1995-2008 Business Sale Report. A division of Business Data International Ltd. All rights reserved | |
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