Icelandic retail predator Baugur could still be set to sweep up some of Somerfield’s unwanted stores following a takeover, despite pulling out of the bidding war for the chain less than two months ago.
That is the verdict of leading analysts after Baugur, which owns the Big Food Group and holds a stake in a number of general UK retailers, this week took a 10% stake in a £500m property fund aimed at acquiring UK food stores and retail parks.
The establishment of the fund, headed by majority holders HBOS and West Coast Capital, a private equity partnership run by Scottish entrepreneur Sir Tom Hunter, has
prompted analysts to speculate that unwanted Somerfield stores following a buyout of the chain could be a target.
Richard Ratner, a retail analyst from Seymour Pierce, said: “The disposal of Somerfield stores could interest them, but it really depends on who wants to sell.”
Paul Smiddy, a retail analyst from RW Baird, added that the property venture would “look to buy individual properties or groups of properties as and when they become available.”
Baugur’s potential return to the battle for at least part of Somerfield comes as the OFT has ruled that the takeover target must sell 12 of the 114 former Morrisons stores it bought. As The Grocer went to press, Somerfield was still to decide whether it was to appeal.
United Co-op has also confirmed that it is back in the frame for Somerfield stores and is in talks with the London & Regional Properties/Nomura consortium that has now completed due diligence. The co-op, which originally pulled out of the race for its bigger rival in June, this week announced that its half-year turnover had exceeded £1bn for the first time.
Baugur and its fund allies have already committed £200m of the £500m in retail parks in Northumberland and Oxfordshire and in a number of smaller deals in Paisley and Stirling.
Baugur’s dive back into the acquisition scene has raised eyebrows because it previously said it would step back from mergers and acquisitions until after the conclusion of the high-profile fraud trial involving six of its top executives, including chief executive Jon Asgeir Johannesson in Iceland.
It emerged this week that the judge presiding over the case believes that 18 of the 40 charges are flawed.