UK: Asda sales back interest in Iceland
An unnamed source close to the situation, quoted by Sky News, said Asda was cutting back its interest in the frozen food retailer but was still keen on around 200 of its stores and could team up with a private equity bidder. Recent reports suggested Asda had previously been working with Scottish supermarket group Farmfoods on the joint bid.
Landsbanki, which together with fellow failed Icelandic bank Glitnir, is selling a 77% stake in Iceland Foods, declined to comment. The sellers are hoping to secure a price that values the whole of Iceland Foods at £1.5bn or more.
Last month private equity firm TPG was dropped from the auction because its bid was too low, while other interested parties including Morrisons and private equity firms Bain and BC Partners moved forward to a second round of bidding expected around the end of January.
The Sky News report suggested Asda is contemplating talks with Bain Capital and BC Partners about taking on a much smaller chunk of the group’s shops. Asda’s decision to scale back its interest is said to have been largely driven by competition issues which would mean that it would have to shed at least half of the Iceland store estate.
Iceland Foods founder and Chief Executive Malcolm Walker, who together with other managers owns the remaining 23% stake of the business, has also said he is working on a bid. It is understood that Walker is thinking about bidding for the company later in the process, with backing from pension funds and sovereign wealth.
Iceland Foods had a strong Christmas, with sales at stores open over a year rising at least 5%, a person with knowledge of the matter said.
Source: www.kamcity.com